Karachi: State Bank of Pakistan announced on Wednesday that Saudi Arabia has agreed to extend a $3 billion deposit for an additional year, providing crucial financial support to Pakistan’s economy.
The extension of the deposit, which was set to mature on December 5, 2023, comes as part of an ongoing agreement between the State Bank of Pakistan (SBP) and the Saudi Fund for Development (SFD). The deposit’s rollover is expected to assist Pakistan in meeting its gross financing needs during the current fiscal year.
In November 2021, the Saudi authorities initially extended this financial support through an agreement with the SBP, aimed at shoring up Pakistan’s foreign exchange reserves. The SBP had previously announced the deposit’s extension last year, emphasizing Saudi Arabia’s commitment to providing ongoing financial assistance to Pakistan.
The announcement aligns with Pakistan’s efforts to attract increased foreign investment and maintain its foreign currency reserves. In this regard, Pakistan’s caretaker Prime Minister Anwaar-ul-Haq Kakar has been visiting the Gulf region where already substantial multibillion-dollar agreements have been signed with the United Arab Emirates and Kuwait.
Now this extension of a $3 billion deposit for an additional year by Saudi Arabia is expected to be vital in meeting Pakistan’s estimated $25 billion gross financing needs for the fiscal year 2024, and to support Pakistan’s economic growth, contributing to the nation’s financial stability.
Earlier in the year, Pakistan secured a short-term $3 billion loan from the International Monetary Fund (IMF) to address government debt concerns, with the next tranche of $700 million expected to be released in December.