SBP, IFC sign agreement to strengthen local currency lending

KARACHI: The State Bank of Pakistan has partnered with the World Bank Group, through its private sector arm, the International Finance Corporation (IFC), to expand local currency financing and support private sector growth in Pakistan, a statement said on Monday.

“Through an ISDA agreement, the partnership will enable the IFC to manage currency risks more effectively and increase its investments in Pakistani rupees. This is an important step towards unlocking financing for critical sectors of the economy and creating jobs across the country,” the SBP said.

“Promoting private sector growth in Pakistan is paramount to successful, sustainable economic development of the country,” said SBP Governor Jameel Ahmad. “The partnership with the IFC aims to enhance financing opportunities for the private sector.”

“With currency volatility posing significant risks to developing economies, access to local currency financing has never been more important,” said IFC Vice President and Treasurer, Treasury and Mobilisation John Gandolfo. “Promoting this type of financing is a strategic priority for the World Bank Group and a catalyst for economic growth in Pakistan.”

Exchange rate risks pose a significant challenge for companies in developing economies that borrow in hard currencies, such as the US dollar, while earning revenue in local currencies. Addressing this currency mismatch is essential not only to strengthen local businesses’ ability to mitigate risks and maintain financial resilience, but also to support broader economic stability.

The IFC is committed to leveraging innovative financial instruments and strengthening partnerships to address the growing need for local currency financing in emerging markets. Through this partnership with the IFC, the SBP aims to bolster economic resilience, promote private sector development and improve foreign exchange liquidity in Pakistan.