ISLAMABAD: Pakistan’s central bank on Wednesday announced the Saudi decision to extend the term of a $3 billion deposit for yet another year to help the economy of the South Asian state which has been striving for increased foreign investment.
The Saudi authorities extended the financial support in November 2021 under an agreement signed between the State Bank of Pakistan (SBP) and the Saudi Fund for Development (SFD) to support Pakistan’s dwindling foreign exchange reserves.
The SBP also announced the deposit’s extension last year, saying that Saudi Arabia had agreed to continue its financial assistance to Pakistan.
“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 central bank said in a brief statement.
“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 to maintain the foreign currency reserves of Pakistan and contribute to the economic growth of the country,” it added.
The announcement comes at a time when Pakistan’s interim Prime Minister Anwaar-ul-Haq Kakar is on a week-long visit to the Gulf region where the country has signed multibillion-dollar deals with the United Arab Emirates and Kuwait.
Earlier this year, Pakistan managed to secure a short-term loan from the International Monetary Fund (IMF) amounting to $3 billion in a move that was widely viewed as an attempt to stave off sovereign debt default.
The international lender recently conducted the country’s economic review under the same facility and is likely to release the next tranche of $700 million in December.
The IMF has also raised concerns about Pakistan’s external financing.
The Saudi decision to extend the term of its deposit with the SBP is likely to help Pakistan’s economy in the same context.
“The $3 billion rollover is an important move in securing $25 billion in gross financing needs estimated by Pakistan for FY-24,” former adviser to the finance ministry, Khaqan Najeeb, explained the significance of the development while speaking to Geo News.