KARACHI: In a significant move to support economic growth and manage currency risks, the State Bank of Pakistan (SBP) has partnered with the International Finance Corporation (IFC) — the private sector arm of the World Bank Group — to expand local currency financing for the private sector.

The SBP on Monday announced the signing of an agreement with the IFC under the International Swaps and Derivatives Association (ISDA) framework, enabling the multilateral institution to invest in Pakistani rupees and better manage exchange rate risks.

“This is an important step towards unlocking financing for critical sectors of the economy and creating jobs across the country,” the SBP said in a statement.

SBP Governor Jameel Ahmad noted the significance of the partnership in fostering economic development. “Promoting private sector growth in Pakistan is paramount to the country’s sustainable economic development. This partnership with the IFC aims to enhance financing opportunities for the private sector,” he said.

John Gandolfo, Vice President and Treasurer for Treasury and Mobilisation at IFC, 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.”

Borrowing in hard currencies such as the US dollar while earning revenues in local currency exposes companies in developing economies to considerable exchange rate risks. Addressing this mismatch is essential for strengthening the financial resilience of local businesses and ensuring broader economic stability.

“Liquidity is like oxygen for businesses, while volatility is like fire,” said Faisal Mamsa, CEO of Tresmark. “What this partnership promises is liquidity without volatility — a small administrative step, but one with far-reaching implications and a real boon for local businesses.”

The SBP said the IFC is committed to leveraging innovative financial instruments and deepening partnerships to meet the growing demand for local currency financing in emerging markets. The collaboration aims to boost economic resilience, support private sector develop­ment, and improve foreign exchange liquidity in Pakistan.

ADB-WB sign agreement

Meanwhile, the Asian Development Bank (ADB) signed on Monday a $3bn sovereign exposure exchange agreement with the World Bank to increase ADB’s lending capacity for its developing member countries.

The agreement is ADB’s first with the WB and its sixth with other multilateral development banks since 2020, bringing the cumulative exchanged amount to $9bn.

Published in Dawn, October 21st, 2025