State Bank of Pakistan, IFC Sign Agreement to Boost Local Currency Lending

Karachi: The State Bank of Pakistan (SBP) and the International Finance Corporation (IFC), a member of the World Bank Group, have signed an agreement aimed at expanding local currency lending in Pakistan to support private sector growth.

Under the ISDA agreement, the partnership will enable IFC to manage currency risks more effectively and increase investments denominated in Pakistani rupees. The initiative is expected to remove barriers to financing key sectors of the economy and contribute to job creation across the country.

SBP Governor Jameel Ahmad said that promoting private sector growth is essential for Pakistan’s sustainable economic development. “This partnership with IFC is designed to enhance access to credit for private enterprises and strengthen their contribution to national prosperity,” he noted.

John Gandolfo, IFC Vice President and Treasurer for Treasury and Mobilization, highlighted that currency volatility poses significant risks to developing economies. “The issuance of local currency loans has become increasingly important. The World Bank Group views the promotion of such lending as a strategic priority that will stimulate economic growth in Pakistan,” he said.

Gandolfo added that exchange rate risks are a major challenge for businesses in developing countries that borrow in stable currencies such as the U.S. dollar while earning revenues in local currency. “Addressing this mismatch is crucial not only for reducing financial risk and maintaining resilience but also for supporting broader macroeconomic stability,” he emphasized.

He further stated that IFC is committed to using innovative financial instruments and strengthening partnerships to meet the growing need for local currency financing in emerging markets. Through this collaboration, the SBP aims to enhance economic resilience, promote private sector development, and improve foreign exchange liquidity in Pakistan.