KARACHI: The State Bank of Pakistan (SBP) and the International Finance Corporation (IFC) — a member of the World Bank Group — have signed an agreement to expand local currency financing and support private sector growth in Pakistan.
The agreement, signed under the International Swaps and Derivatives Association (ISDA) framework, would enable the IFC to manage currency risks more effectively and increase its investments in Pakistani rupees, read a statement issued by the central bank on Monday.
“This is an important step towards unlocking financing for critical sectors of the economy and creating jobs across the country,” read the statement.
It quoted SBP Governor Jameel Ahmad as saying: “Promoting private sector growth in Pakistan is paramount to successful, sustainable economic development of the country.”
He added that the partnership with IFC aims to enhance financing opportunities for the private sector.
IFC Vice President and Treasurer, Treasury, and Mobilisation John Gandolfo said: “With currency volatility posing significant risks to developing economies, access to local currency financing has never been more important.”
“Promoting this type of financing is a strategic priority for the World Bank Group and a catalyst for economic growth in Pakistan,” Gandolfo added.
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, according to the statement.
It said that 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 statement further noted that through this partnership with IFC, SBP aims to bolster economic resilience, promote private sector development and improve foreign exchange liquidity in Pakistan, it added.
