IFC signs swap agreement with BCP to finance private sector growth

- Monday, July 25, 2011

IFC signs swap agreement with BCP to finance private sector growth

World Bank private sector arm IFC has signed a swap agreement with Paraguayan central bank BCP to provide guaraní-denominated loans to local companies, help mitigate FX risks and support private sector growth, the multilateral said in a statement.

Access to local currency will allow IFC to extend long-term loans to companies that do not generate FX revenues and cannot risk borrowing in dollars or other international currencies.

BCP will act as market maker with the intention of later on transferring the business to the private sector. "This agreement will help implement a new instrument in the financial market that it is currently lacking, and at no cost for BCP," said BCP president Jorge Corvalán.

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"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.