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.
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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