Pakistan has entered its first Diversified Payment Rights (DPR) Programme through an agreement between the International Finance Corporation (IFC) and Bank Alfalah Limited, opening a new channel for mobilising long-term foreign currency financing as the country seeks to diversify its external funding sources and expand access to international capital markets. A Project Agreement for the programme was signed at the Finance Division on Thursday, with the initial transaction envisaging financing of up to $100 million. The arrangement represents a new financing structure for Pakistan and could provide a basis for attracting additional international institutional and private investors, subject to market conditions and the performance of the initial transaction.
The agreement was signed in the presence of Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb. IFC was represented by Momina Aijazuddin, Regional Industry Director, Financial Institutions Group, Middle East & Central Asia, while Bank Alfalah was represented by Atif A. Bajwa, President and Chief Executive Officer. The signing brings together the Government of Pakistan, IFC, the State Bank of Pakistan (SBP) and Bank Alfalah as part of a financing structure designed to use eligible future foreign currency payment flows as the basis for mobilising funding.
The DPR structure is being pursued under the direction of the Prime Minister and allows financing to be mobilised against eligible future foreign currency payment flows. Unlike conventional financing arrangements, the structure provides a market-based mechanism that can potentially attract participation from international institutional and private investors. The initial $100 million transaction is expected to serve as the first application of this structure in Pakistan, with future transactions potentially depending on market conditions and the performance of the programme’s initial transaction.
Speaking at the signing ceremony, Senator Muhammad Aurangzeb recognised the coordination between the Ministry of Finance, SBP, IFC and Bank Alfalah in developing the transaction. He said the regulatory, policy and technical groundwork required to establish the DPR structure represented an important first step that could allow Pakistan to pursue similar market-based financing structures in the future. The finance minister also emphasised the importance of diversifying the country’s foreign currency financing sources as Pakistan seeks alternatives to existing external financing arrangements.
Aurangzeb also stressed the need to develop a pipeline of eligible projects that could make use of such financing channels for productive economic activity. The establishment of a DPR framework could therefore provide another mechanism through which foreign currency financing can be directed towards eligible requirements and investment opportunities, while also supporting the government’s broader efforts to expand the range of financing sources available to Pakistan.
Representatives of IFC acknowledged the support and coordination provided by the Government of Pakistan and the State Bank of Pakistan throughout the development of the transaction. IFC expressed confidence that the DPR structure could provide an additional channel for long-term international financing and contribute to the further development of Pakistan’s capital markets. The institution’s involvement also brings an international development finance perspective to the country’s first DPR transaction.
Bank Alfalah welcomed the support provided by the government, SBP and IFC in establishing the programme and highlighted its position as the first Pakistani bank to undertake a DPR transaction. The bank said it remains committed to using the structure for eligible foreign currency requirements and productive investment. Its participation places the bank at the centre of the first transaction under Pakistan’s new DPR framework and could provide experience for potential future transactions involving other Pakistani financial institutions.
The transaction is being viewed as a milestone for Pakistan’s debt capital market and external financing framework. By introducing a structure based on eligible future foreign currency payment flows, the programme could broaden the range of financing mechanisms available to Pakistani institutions and create a potential precedent for similar transactions by other banks. The extent to which the structure is replicated in the future will depend on market conditions and the performance of the initial transaction.
The signing ceremony was attended by Secretary Finance Imdadullah Bosal and Simon Andrews, IFC’s Division Director for Pakistan, Afghanistan, Kyrgyz Republic, Tajikistan and Turkmenistan, along with senior representatives from the Finance Division, IFC, Bank Alfalah and the State Bank of Pakistan. Their participation reflected the institutional coordination involved in establishing the country’s first DPR programme.
The launch of the programme comes as Pakistan continues efforts to broaden its external financing base and strengthen its access to international capital markets. The initial transaction of up to $100 million provides the first test of the DPR structure in Pakistan, while its successful implementation could create opportunities for additional market-based financing arrangements. For Bank Alfalah, the agreement marks its distinction as the first Pakistani bank to undertake a DPR transaction, while for the country it establishes a new avenue for mobilising long-term foreign currency funding.
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