By Staff Reporter
ISLAMABAD: Pakistan received a $2 billion deposit from Saudi Arabia on Tuesday, a day before the International Monetary Fund’s (IMF) board is expected to approve a $3 billion lifeline loan for the country’s struggling economy.
The deposit from the kingdom, a longtime ally of Pakistan, will bolster the foreign exchange reserves of the State Bank of Pakistan (SBP), which rose to $4.46 billion last week, enough to cover about a month of imports.
The SBP’s forex reserves increased by $393 million to reach $4.46 billion at the end of last week, mainly due to the receipt of official government inflows. Cumulatively, reserves held by the SBP have surged by $937 million in the last two weeks.
The inflow reflects the growing confidence of Pakistan’s allies and the international community in its economic turnaround, Finance Minister Ishaq Dar and Prime Minister Shehbaz Sharif said in separate statements.
“This inflow has increased the forex reserves held by the SBP and will accordingly be reflected in the forex reserves for the week ending July 14, 2023,” Dar said in a video message.
“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 financial support from Saudi Arabia, which had pledged the money earlier but waited for the IMF deal to be finalized, comes as a relief for Pakistan, which has been grappling with a balance of payments crisis amid low growth, high inflation, and a weak currency.
The IMF staff and Pakistani authorities reached an agreement on June 29 on a nine-month Stand-By Arrangement that aims to support the government’s efforts to address the urgent balance of payments needs, strengthen fiscal and monetary policies, and advance structural reforms.
The IMF board is expected to approve the arrangement on July 12, paving the way for an immediate disbursement of about $1 billion.
Pakistan had earlier cleared eight of the 11 listed program reviews under a previous IMF loan that expired on June 30, but had faced delays in receiving the rest due to missed targets and policy slippages.
Prime Minister Sharif also expressed his gratitude to Saudi Arabia and Crown Prince Mohammad bin Salman for ensuring 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,” the premier said in a tweet.
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