“Saudi Arabia has been coordinating with the IMF to ensure that Pakistan is fully supported. The commitment can be announced within the next two days.”
News Desk
KARACHI: Saudi Arabia has decided to rollover its $3 billion deposit in Pakistan’s central bank and an announcement on the kingdom’s assistance to cash-strapped nation is expected in next two days, Bloomberg newswire reported on Saturday.
“The Saudi Finance Ministry plans to renew its $3 billion deposit with State Bank of Pakistan as soon as this week,” the wire service quoted unnamed officials as saying. “The kingdom also plans to provide $100 million a month for 10 months in petroleum products that will be granted as additional support.”
Bloomberg reported that Pakistan’s funding gap has been covered after the kingdom’s commitment Saudi’s assurance will pave the way for the International Monetary Fund’s loan approval at the end of the month. “Saudi Arabia has been coordinating with the IMF to ensure that Pakistan is fully supported.” “The commitment can be announced within the next two days.”
Last year, Saudi Arabia deposited $3 billion in Pakistan’s central bank to help support its foreign reserves. With a yawning current account deficit and foreign reserves falling to as low as $8 billion, the country is in dire need of external finances.
The IMF was also looking to assess Saudi Arabia’s commitment to financing Pakistan before the multilateral lender disburses fresh funds under the Extended Fund Facility.
The Washington-based lender wants to ensure that Saudi Arabia will follow through with as much as $4 billion in funding to Pakistan to ensure Islamabad does not have a funding gap after the IMF loan.
Three years ago, the Pakistan government under Prime Minister Imran Khan had inked a 39-month $6 billion programme with the IMF. But only half the funds have been disbursed to date as Islamabad has struggled to keep targets on track.
The present coalition government had sought an additional one billion dollar and a year’s extension in the facility, to which the IMF agreed.
Pakistan needs about $36 billion to $37 billion in financing in the current fiscal year. An IMF deal would help secure funds from other sources such as the World Bank and friendly nations including China.
Previously the country’s finance minister said countries that have typically been generous in lending to the crisis-hit nation are proceeding more cautiously now.
“We went to Saudi Arabia, Dubai and spoken to other countries — they are ready to give money, but all of them say we need to go to the IMF first,” said the minister, Miftah Ismail said in May.
Pakistan had reached a staff-level agreement with the International Monetary Fund to release two tranches worth $1.17 billion and an additional one billion dollar and a year’s extension in the bailout loan facility. Islamabad also received a Letter of Intent (LoI) from the IMF to formally request the loan from the board of Washington-based lender. IMF board meeting is due on August 29.
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