By Staff Reporter
KARACHI: Saudi Arabia agreed to roll over a $3 billion deposit held with Pakistan’s central bank for another year, providing a boost to the cash-strapped South Asian nation’s foreign exchange reserves amid ongoing economic pressures.
The State Bank of Pakistan said Thursday that the Saudi Fund for Development, acting on behalf of the kingdom, extended the deposit, which had been due to mature on Monday. The facility was first placed in 2021 and has been renewed annually since, including in 2022, 2023 and 2024.
“The extension of the term of the deposit is a continuation of the support provided by the Kingdom of Saudi Arabia to the Islamic Republic of Pakistan, which will help in strengthening the foreign exchange reserves of Pakistan and contribute to the country’s economic growth and development,” the central bank said in a statement.
The renewal comes as Pakistan’s reserves remain under strain. Last week, the State Bank of Pakistan reported that its foreign exchange holdings edged up by a meager $9 million to $14.560 billion in the week ended Nov. 21. Still, the country’s total liquid foreign reserves slipped to $19.605 billion from $19.738 billion the prior week, driven by a drop in commercial banks’ holdings to $5.044 billion from $5.186 billion.
Saudi Arabia first stepped in with the deposit extension in 2022 as Pakistan grappled with an economic meltdown stemming from years of financial mismanagement and devastating losses from climate-related disasters. The nation teetered on the edge of sovereign default in June 2023 before clinching a last-minute bailout from the International Monetary Fund.
The two countries maintain close ties across economic, defense, tourism, minerals and other sectors, with Riyadh repeatedly offering critical aid to Islamabad during times of fiscal distress. That assistance has included deferred oil payments, guarantees to multilateral lenders like the IMF, and repeated rollovers of the central bank deposit. Saudi Arabia stands as Pakistan’s largest source of remittances, home to more than 2.5 million Pakistani expatriates. In September, the allies deepened their security cooperation by signing a strategic defense pact that treats an attack on one as an assault on both.
Copyright © 2021 Independent Pakistan | All rights reserved
