- SBP says extension is continuation of support provided by Saudi Arabia to Pakistan
The Kingdom of Saudi Arabia (KSA) has extended the term for a $3 billion deposit in the State Bank of Pakistan (SBP) through the Saudi Fund for Development (SFD) "in support of the Pakistani economy", the central bank said on Friday.
“The SFD extended the term for the deposit provided by the Kingdom of Saudi Arabia in the amount of $3 billion to the SBP,” read an SBP statement.
The central bank said that the extension of the term of the deposit "is a continuation of the support provided by the government of Saudi Arabia to the government of Pakistan."
"The deposit (is) aimed to shore up the foreign currency reserves in the Bank and help Pakistan in facing the economic repercussions of the COVID-19 pandemic; it, furthermore, contributed to meet external sector challenges and achieve sustainable economic growth for the country,” said SBP.
In a statement, the Saudi Arabian government agency said that the extension will help Pakistan "to meet external sector challenges and achieve sustainable economic growth".
The extension of the $3 billion deposit is considered crucial for the cash-starved South Asian economy, which has seen its foreign exchange reserves deplete in recent months.
The $3 billion-deposit agreement was signed through the SFD with the central bank of Pakistan in November last year, after the issuance of royal directives that reflect the continuation of the close relationship between the two countries.
Under the deposit agreement, the SBP statement at the time said, the SFD shall place a deposit of $3 billion with the SBP.
However, the development will not increase Pakistan's current level of foreign exchange reserves which currently stand below $8 billion.
Foreign exchange reserves held by the SBP decreased $327 million on a weekly basis, clocking in $7.5 billion as of November 25, 2022, according to data released on Thursday.
Total liquid foreign reserves held by the country stood at $13.38 billion. Net foreign reserves held by commercial banks clocked in at $5.88 billion.