The State Bank of Pakistan (SBP) and the International Finance Corporation (IFC) have entered into an agreement to increase local currency lending in Pakistan.
The State Bank of Pakistan has partnered with the IFC, the private sector arm of the World Bank Group, with the aim of expanding local currency lending and supporting private sector growth in Pakistan.
Under the ISDA (International Swaps and Derivatives Association) Master Agreement, this partnership will enable the IFC to effectively manage currency risks and increase investments in Pakistani Rupees. The agreement is a significant step towards removing obstacles in providing credit to key sectors of the Pakistani economy and generating employment across the country.
Jameel Ahmad, Governor of the State Bank, stated that promoting private sector growth in Pakistan is crucial for the country’s successful and sustainable economic development. The objective of this partnership with the IFC is to enhance credit opportunities for the private sector.
John Gandolfo, Vice President and Treasurer of Treasury and Mobilization at the IFC, said that currency volatility is one of the significant risks facing developing economies, and local currency lending has become more important than ever. He added that the World Bank Group gives strategic priority to promoting such lending, and this initiative will stimulate economic growth in Pakistan.
He further elaborated that exchange rate risks pose a serious challenge for companies in developing countries that borrow in stable currencies like the US Dollar while earning their revenues in local currency. Addressing this currency mismatch is essential not only for local businesses’ ability to mitigate risks and maintain financial resilience but also for supporting broader economic stability.
He affirmed the IFC’s commitment to using innovative financial instruments and strengthening partnerships to meet the growing need for local currency financing in emerging markets. Through this partnership with the IFC, the State Bank aims to enhance the country’s economic strength and foster private sector development.
