The State Bank of Pakistan (SBP) 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.
Through an International Swaps and Derivatives Association (ISDA) agreement, the partnership will enable IFC to manage currency risks more effectively and increase its investments in Pakistani rupees, the central bank said in a statement.
SBP considered the agreement an important step towards unlocking financing for critical sectors of the economy and creating jobs across the country.
“Promoting private sector growth in Pakistan is paramount to successful, sustainable economic development of the country,” said Jameel Ahmad, the Governor of SBP. “The partnership with 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 John Gandolfo, IFC Vice President and Treasurer, Treasury & Mobilization.
“Promoting this type of financing is a strategic priority for the World Bank Group and a catalyst for economic growth in Pakistan.”
IFC – a member of the World Bank Group – is the largest global development institution focused on the private sector in emerging markets.
Meanwhile, the SBP said that 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,” read the statement.
Moreover, IFC said it remains 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 IFC, SBP aims to bolster economic resilience, promote private sector development and improve foreign exchange liquidity in Pakistan,” the central bank added.