December 1, 2021: Saudi Arabia will deposit $3 billion in Pakistan's foreign reserves in a week or so for one year at 4% interest under a support package signed on Monday, Pakistan's finance ministry spokesman said on Tuesday.
The South Asian nation has faced growing economic challenges with sliding foreign reserves, a widening current account deficit, a depreciating currency and high inflation.
Pakistan's total liquid foreign reserves stand at $22.77 billion, according to the central bank.
The Saudi support package that included a $1.2 billion oil loan facility was agreed during Prime Minister Imran Khan's visit to Riyadh last month.
Asked when the Saudi deposit would land in Pakistan's foreign reserves, Finance Ministry spokesman Muzammil Aslam told Reuters: “Hopefully this week or early next week.”
He said it was a “one year demand deposit” with 4% interest.
Chief Executive Officer Sultan Bin Abdul Rahman Al-Marshad of the Saudi Fund for Development (SFD) and Pakistan's State Bank Governor Reza Baqir signed the agreement in Karachi on Monday, the central bank said in statement.
“Under this deposit agreement, SFD shall place a deposit of USD 3 billion with SBP. The deposit amount under the agreement shall become part of SBP's Foreign Exchange Reserves,” it said.
The Saudi facility has come a week after the International Monetary Fund (IMF) agreed with Pakistan on measures needed to revive a stalled $6 billion funding programme. The completion of the review, pending since earlier thisyear, would make available 750 million in IMF special drawingrights, or around $1 billion, bringing total disbursements sofar to about $3 billion, the statement said. The central bank has raised its benchmark interest rate by 150 basis points to 8.75% to counter inflationary pressures and preserve stability with growth. Headline inflation had reached 9.2% in October, up from 8.4%two months earlier, and the Pakistani rupee that closed at 175.72 at inter-bank against a dollar has depreciated over 11% since the start of this year.