A massive support from Arabian Peninsula comes to Pakistan’s shores lately to keep Pakistan’s freefall economy afloat.
On last Sunday, Pakistan has signed memorandums of understanding (MoUs) worth billion dollars with the United Arab Emirates (UAE) across diverse sectors.
Today, Saudi Arabia extended term for a $3 billion deposit placed with Pakistan to support Pakistan’s economy, said the State Bank of Pakistan in a press release.
“The Saudi Fund for Development (SFD) on behalf of the Kingdom of Saudi Arabia has extended the term for the deposit of USD 3 billion maturing on 05 December 2023 for another one year,” the bank said, adding the said amount has been placed with State Bank of Pakistan (SBP) on behalf of Islamic Republic of Pakistan.
According to the SBP, the extension of the term of the deposit was a continuation of the support provided by Saudi Arabia to Pakistan, which would help to maintain the foreign currency reserves of Pakistan and contribute to the economic growth of the country.
It noted that “the USD3 billion-deposit agreement was initially signed through the SFD with the SBP in the year 2021 and rolled over subsequently in 2022, after the issuance of the royal directives that reflect the continuation of the close relationship between the two brotherly countries.”
The move would strengthen Pakistan’s position in upcoming discussions with the International Monetary Fund (IMF) regarding the phased disbursement of $3 billion in funding as part of a standby agreement.
The standby agreement reached following Pakistan’s failure to complete the previous IMF programme.
On signing of the stand-by agreement, IMF in its statement said “Pakistan’s’ economic reform program aims to support immediate efforts to stabilize the economy and guard against shocks while creating the space for social and development spending to help the people of Pakistan.”
“Steadfast policy implementation will be critical for Pakistan and the success of the program. This will require greater fiscal discipline, a market-determined exchange rate to absorb external pressures, and further progress on reforms related to the energy sector, climate resilience, and the business climate.”
Initially, the IMF released $1.2 billion under the agreement. Subsequent talks in Islamabad led to a staff-level agreement, facilitating the disbursement of an additional $700 million.
The remaining $1.1 billion will necessitate further discussions in the coming months as the program approaches its conclusion around March.
The success of the deal hinged significantly on financial support from various countries, with Saudi Arabia playing a pivotal role in ensuring its realization.
This extension underscores Pakistan’s commitment to fulfilling the terms of the agreement and navigating its financial challenges with international support.
