“The State Bank of Pakistan (SBP) has received a deposit of $2 billion from the Kingdom of Saudi Arabia,” Dar said at a presser, adding that this inflow has increased forex reserves and that this will be reflected in the forex reserves for the week ending July 14. “On Friday, our reserves had closed in at less than $10 billion, standing at roughly $9.67 billion, so you can now imagine them close to $11.67 billion,” the minister said.
The inflows came after Islamabad signed a short-term deal with the IMF on June 30 under a standby arrangement that will disburse $3 billion over a nine-month period, subject to approval by the IMF’s board, which will meet on July 12. Saudi Arabia had pledged the money to Pakistan and waited for the much-awaited IMF deal to be announced before depositing it.
The financial support will shore up the depleting foreign exchange reserves, which had dipped to cover barely a month of controlled imports.
On behalf of the prime minister and Army chief, Dar said he thanked the Saudi leadership for its support.
Prime Minister Shehbaz Sharif also expressed his gratitude to Saudi Arabia and Crown Prince Mohammad bin Salman for ensuring financial support to Pakistan. “This deposit will strengthen Pakistan’s foreign exchange reserves. It reflects the growing confidence of our brotherly countries and the international community in Pakistan’s economic turnaround. We remain committed to making all necessary efforts to improve Pakistan’s economy,” the Pakistan PM said.
Multilateral and bilateral funds were a major obstacle in the way of Pakistan’s deal with the IMF — which remained stalled for more than nine months and had expired on June 30. The standby arrangement provides the nation with breathing space, avoiding sovereign default, and helps the government streamline fiscal policies.
With sky-high inflation and foreign exchange reserves barely enough for a month of controlled imports, analysts say Pakistan’s economic crisis could have spiralled into a debt default in the absence of the IMF bailout.