KARACHI: Pakistan Saturday received foreign exchange deposits worth $3 billion from Saudi Arabia for the support of balance of payment.
These inflows were received by the State Bank of Pakistan (SBP) in the shape of safe deposits for one year to address the country’s balance of payments crisis.
Shaukat Tarin, Adviser to the Prime Minister on Finance and Revenue, revealed on Twitter that some $3 billion Saudi deposits have been received by the SBP. Tarin has also thanked His Excellency Crown Prince Mohammed Bin Salman and the Kingdom of Saudi Arabia for this support.
These deposits will help support Pakistan’s foreign currency reserves and contribute towards resolving the adverse effects of the COVID-19 pandemic. These inflows will become part of SBP’s foreign exchange reserves.
As per estimates, with the arrival of these inflows the SBP’s reserves are estimated to cross the $19 billion mark, if no major external debt servicing was not made. The country’s total liquid foreign exchange reserves are most likely to reach $ 25-billion mark. The country’s total foreign exchange reserves stood at $22.499 billion on November 26, 2021.
Pakistan’s current account has been deteriorating for the last few months followed by soaring import bills. Pakistan had posted over $5-billion current account deficit in July-Oct of FY22 as against $1.3 billion surplus in the same period of last fiscal year.
Saudi Arabia, in October, agreed to provide some $3 billion in foreign currency support in the shape of safe deposits for a year to address Pakistan’s balance of payments crisis. Saudi Arabia also announced to extend a support of one-year deferred payment facility for import of oil. Later, on November 27, the federal cabinet approved a summary of the deal of Saudi Arabia’s $3 billion support package for Pakistan in safe deposits and $1.2 billion worth of oil supplies on deferred payments.
After approval from the federal cabinet, a formal deposit agreement was signed between the Saudi Fund for Development and the State Bank last Monday for a deposit of $3 billion to build Pakistan’s foreign exchange reserves.
The agreement was signed by the Chief Executive Officer of SFD, Sultan Bin Abdul Rahman Al-Marshad and the Governor SBP, Dr Reza Baqir at the State Bank of Pakistan in Karachi, Pakistan.
Copyright Business Recorder, 2021