Islamabad, 29 November, 2023 (GNP): The State Bank of Pakistan (SBP) announced today that the Kingdom of Saudi Arabia has extended the term for a $3 billion deposit to Pakistan for an additional year.
This extension, facilitated through the Saudi Fund for Development (SFD), reaffirms the Kingdom’s continued support to Pakistan’s economic resilience and stability.
Initially established in November 2021, the deposit was set to mature on December 5 of the current year. However, the Saudi extension showcases a gesture of ongoing solidarity and collaboration between the two nations.
1/2 On behalf of the Kingdom of Saudi Arabia, the Saudi Fund for Development (SFD) has extended the term of USD3bn deposit maturing on 05Dec23 for another year. This deposit is placed with SBP on behalf of the Islamic Republic of Pakistan.
— SBP (@StateBank_Pak) November 29, 2023
The SBP expressed gratitude, highlighting how this extension will significantly contribute to bolstering Pakistan’s foreign exchange reserves while fostering economic growth.
Furthermore, this extension aligns with prior directives issued by Saudi Crown Prince Mohammed Bin Salman earlier this year.
The Crown Prince had urged the SFD to explore the possibility of increasing the deposit amount to $5 billion.
In line with this, Saudi Arabia had previously augmented the deposit by an additional $2 billion in July, underscoring their commitment to Pakistan’s economic stability and growth.
Dr. Khaqan Hassan Najeeb, a former advisor to the Ministry of Finance, emphasized the positive impact of this extension on Pakistan’s discussions with the International Monetary Fund (IMF).
He noted that this extension strengthens Pakistan’s position, potentially paving the way for the release of the next tranche of $700 million under the IMF’s standby agreement.
The IMF has made securing external financing a pivotal condition for the agreement established with Pakistan in July.
This financial support was instrumental in averting a looming sovereign debt default and mitigating a balance of payments crisis.
The IMF has already disbursed $1.2 billion under the agreement, with additional funding contingent upon discussions regarding the remaining $1.1 billion. These discussions are anticipated to unfold in the coming months, culminating in the conclusion of the programme around March.
The extension of the deposit term from Saudi Arabia exemplifies the robust bilateral relations between the two countries and stands as a testament to their shared commitment to fostering economic stability and growth.