The swap agreement will allow IFC to hedge its exchange rate and currency risks, increasing IFC's ability to offer financing to businesses in local currency. Being able to borrow in Kazakh Tenge is important for companies that do not generate foreign exchange revenues and therefore face risks when borrowing in dollars or other international currencies.

“We consider the Cross-Currency Swap Agreement between the National Bank of Kazakhstan and IFC as a tool to further develop the capital market in the country,” said Grigori Marchenko, Governor of the National Bank of Kazakhstan. “It will open new long-term sources of funding for local companies contributing to the sustainable economic growth of the Republic of Kazakhstan.”

Shanker Krishnan, IFC Deputy Treasurer and Head of Derivative Products, said, "Local currency financing is critical for companies working in Kazakhstan’s non-extractive industries. With support from the National Bank of Kazakhstan, IFC will be able to offer its local clients long-term financing without burdening them with exchange rate risks.”

IFC hopes to replicate this initiative in other Central Asian countries that do not already have a swap market to facilitate local-currency lending.

As IFC’s largest client in Central Asia, Kazakhstan had received commitments of close to $1.1 billion in IFC funds and almost $300 million in syndications as of June 30, 2011. IFC's investments in Kazakhstan have been mainly in the financial services, manufacturing and services sectors. Kazakhstan became a member of IFC in 1993.