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Asunción, Paraguay, July 25, 2011
—IFC, a member of the World Bank Group, has signed a swap agreement with the Central Bank of Paraguay to provide local-currency loans to Paraguayan companies, mitigate exchange-rate risks, and support growth of the country’s private sector.
Access to local currency will allow IFC to extend long-term loans to companies that do not generate foreign-exchange revenues and cannot take on risks associated with borrowing in dollars or other international currencies. Swaps are a critical part of a robust financial system.
According to Jorge Corvalan, President of the Central Bank of Paraguay, the swap agreement with IFC will be a very effective mechanism in addressing mismatches in domestic currency-specific liquidity needs. In this situation, the Central Bank will act as market maker with the full intention of transferring the business later on to the private sector. “This agreement will help implement a new instrument in the financial market that is lacking currently, and at no cost for the Central Bank,” he said.
“Access to local currency is critical for the growth of Paraguay’s private sector,” said Paolo Martelli, IFC Director for Latin America and the Caribbean. “By partnering with the Central Bank of Paraguay, IFC can help expand access to financial services for productive companies that need them the most.”
“In addition to enabling IFC to provide access to local currency financing, this initiative is one step toward developing a long-term hedging market in Paraguay that will benefit the private sector,” said Shanker Krishnan, IFC Deputy Treasurer and Head of Derivative Products.
IFC’s strategy in Paraguay promotes business expansion into other emerging markets; supports micro, small, and medium enterprises; fosters global trade; and protects natural resources through environmentally sustainable business practices. For more information about IFC in Latin America and the Caribbean, visit
www.ifc.org/lac
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About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit
www.ifc.org
About the Central Bank of Paraguay
The Central Bank of Paraguay is the Government’s authority that monitors and ensures monetary and foreign exchange stability. Its mission is to preserve the currency value and to promote an effective and stable financial system. The agreement with IFC will allow the Central Bank to deepen and strengthen Paraguay’s financial markets. For further information, visit:
www.bcp.gov.py
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