SBP Partners with IFC to Tackle Dollar Dependency & Promote Rupee Lending

The State Bank of Pakistan (SBP) and the International Finance Corporation (IFC), the private sector arm of the World Bank Group,  have signed an agreement to expand local currency financing and strengthen private sector growth in Pakistan. Under the ISDA agreement, IFC will be able to better manage currency risks and increase investments in Pakistani rupees. The move aims to unlock financing for key sectors of the economy, support business growth, and create jobs across the country. “Promoting private sector growth is vital for Pakistan’s sustainable economic development,” said SBP Governor Jameel Ahmad. “This partnership with IFC will enhance financing opportunities for businesses operating in local currency.” IFC Vice President and Treasurer John Gandolfo said that currency volatility poses serious challenges to developing economies, making local currency lending more important than ever. “This type of financing is a strategic priority for the World Bank Group and a catalyst for Pakistan’s economic growth,” he added. Currency risk remains a major concern for companies in emerging markets that borrow in dollars but earn in local currency. The SBP–IFC collaboration is designed to reduce this risk, improve foreign exchange liquidity, and support financial resilience for Pakistani businesses. The agreement also aligns with SBP’s Vision 2028, which focuses on creating a more stable and inclusive financial system through innovative instruments and partnerships that promote responsible lending and sustainable development. Pakistan’s private sector has long struggled with limited access to affordable local currency financing, particularly as exchange rate fluctuations eroded profitability and borrowing confidence. The IFC, which committed a record $71.7 billion globally in fiscal year 2025, has been active in Pakistan through initiatives supporting renewable energy, SMEs, and financial inclusion. The new SBP–IFC partnership builds on this engagement and is expected to help stabilize financing flows in local currency, easing reliance on dollar-denominated debt and improving long-term investment planning.