ISLAMABAD: Finance Minister Ishaq Dar on Tuesday announced that Saudi Arabia has deposited $2 billion in the State Bank of Pakistan (SBP), adding that this inflow has increased the forex reserves held by the central bank and will accordingly be reflected in the forex reserves by the end of this week.
This development comes only a few days after Islamabad reached a staff-level agreement with the International Monetary Fund (IMF) on a $3 billion Stand-By Arrangement.
Multilateral and bilateral funds were a major obstacle in the way of Pakistan’s deal with the IMF — which remained stalled for more than nine months and expired.
State Bank of Pakistan (SBP) has received deposit of $2 billion from the Kingdom of Saudi Arabia. This inflow has increased the forex reserves held by SBP and will accordingly be reflected in the forex reserves for the week ending 14July2023.
— Ishaq Dar (@MIshaqDar50) July 11, 2023
While addressing a press conference, the finance minister thanked Army Chief Asim Munir on behalf of Prime Minister Shehbaz Sharif, for ‘playing a role’ in helping the government. He also lauded the Saudi rulers for being “true brothers”.
“On behalf of the prime minister and army chief, I extend our heartfelt thanks to the leadership of the Kingdom of Saudi Arabia for their great gesture and support by placing the said deposit of $2 billion with the State Bank of Pakistan,” the minister added.
“In the coming days, I believe that there will be more positive developments on the economic front […] we have reached stability,” the finance minister said.
Saudi Arabia had already pledged the money to Pakistan and waited for the much-awaited IMF deal to be announced before depositing it.
The financial support will shore up the depleting foreign exchange reserves at the central bank, which had dipped to cover barely a month of controlled imports.
With the IMF deal in place, Pakistan can now unlock other external financing. In th plan sent to the lender, sources in the Finance Division said that Pakistan arranged $3.5 billion in bilateral funds from China, $2 billion from Saudi Arabia, and $1 from the United Arab Emirates.
Prime Minister Shehbaz Sharif extends gratitude to Saudis
“On behalf of the people of Pakistan, I would like to extend my deep gratitude to the leadership and brotherly people of the Kingdom of Saudi Arabia for the US$2 billion deposit with the State Bank of Pakistan,” read a statement issued by the PM Office, adding that, “I would like to especially thank my brother Saudi Crown Prince & Prime Minister His Royal Highness Mohammed bin Salman for ensuring this financial support to Pakistan.”
“This deposit will strengthen Pakistan’s foreign exchange reserves. It reflects the growing confidence of our brotherly countries and the international community in Pakistan’s economic turnaround. We remain committed to making all necessary efforts to improve Pakistan’s economy. I would also like to appreciate and thank Finance Minister Senator Ishaq Dar and COAS General Asim Munir for the valuable efforts they have made in this regard.”