by: TN Media News:
“Saudi Arabia Extends $3 Billion Deposit to Pakistan, Bolstering Economic Stability Amid Struggling Finances”
In a significant boost to Pakistan’s beleaguered economy, Saudi Arabia has extended the term of its $3 billion deposit with the State Bank of Pakistan (SBP) for an additional year. Announced by the SBP on Wednesday, the extension reflects the Kingdom’s ongoing support to Pakistan, aiding in the maintenance of foreign currency reserves and contributing to economic growth.
Former adviser to the Ministry of Finance, Khaqan Najeeb, emphasized the importance of the $3 billion rollover, citing its role in securing a substantial portion of Pakistan’s estimated $25 billion gross financing needs for the fiscal year 2024. The extension is seen as instrumental in fortifying Pakistan’s ongoing International Monetary Fund (IMF) program, garnering confirmation from lenders and facilitating approval for the second loan tranche of $700 million.
The initial $3 billion deposit agreement was inked through the Saudi Fund for Development (SFD) with the SBP in 2021, subsequently rolled over in 2022, underscoring the enduring relationship between the two nations.
Pakistan’s economic challenges, marked by depleting foreign reserves and a depreciating rupee, have prompted strategic financial moves. The IMF’s approval of a short-term bailout with stringent conditions last year led to structural reforms and increased prices in gas, energy, and petrol.
As the country grapples with debt repayments and a challenging external financing situation, the extension of the Saudi deposit is a timely intervention. Despite foreign exchange reserves dropping, the expected financing from the IMF, bilateral partners, and multilateral organizations aims to bolster Pakistan’s overall economic stability.
Anticipated inflows from the World Bank, Asian Development Bank, and Asian Infrastructure Investment Bank, coupled with support from friendly nations, are crucial components of Pakistan’s economic recovery strategy.
