• Tuesday, May 28, 2024

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Pakistan, Saudi Arabia set to sign deal for $2 billion deposits

The assistance from Saudi Arabia comes at a crucial time as the IMF programme, signed in 2019, will expire on June 30, 2023

Pakistan’s economic woes are compounded by high fuel costs (Photo: Getty Images)

By: Chandrashekar Bhat

Pakistan is set to sign a deal for additional deposits of $2 billion from Saudi Arabia, authorities said on Saturday (22), a move that will help the country secure the much-required bailout from the IMF.

In March, Pakistan sought Saudi Arabia’s confirmation for funds to secure an IMF deal. Earlier this month Pakistan got Riyadh’s nod for additional funding.

The assistance from Saudi Arabia comes at a crucial time as the IMF programme, signed in 2019, will expire on June 30, 2023. The programme cannot be extended beyond the deadline.

The Washington-based crisis lender has imposed the condition on Pakistan that it should secure $3 bn from other countries for the revival of its $7 bn bailout package.

A top government official told The News International that the State Bank of Pakistan would sign a deal with the Saudi Fund for Development (SFD) for an additional $2 bn deposit.

The official added that Saudi Arabia has confirmed the bilateral assistance support to the International Monetary Fund (IMF), which was also acknowledged by the lender’s staff, the report said.

This agreement is the follow-up on the confirmation of additional financial support of $2 bn and $1 billion from the kingdom and the UAE, the official added.

Official sources clarified that Pakistan neither made any fresh request for more support from Saudi Arabia nor the UAE, except for the already confirmed $2 bn and $1 bn by these countries, respectively.

Saudi Arabia had already rolled over $3 bn in deposits for one year, which matured on December 5, 2022. This deposit is part of foreign exchange reserves of $4.43 bn, lying with the State Bank of Pakistan.

In March, Pakistan received a rollover of $2 bn in deposits for a period of one year from its all-weather ally China.

Pakistan, currently in the throes of a major economic crisis, is grappling with high external debt, a weak local currency and dwindling foreign exchange reserves.

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