Saudi Arabia extends term for $3bn deposit to Pakistan

KARACHI: The State Bank of Pakistan (SBP) announced on Wednesday that Saudi Arabia has extended its term for a $3 billion deposit in the central bank, shoring up the country’s foreign exchange reserves and strengthening domestic economy, ARY News reported.

“The Saudi Fund for Development (SFD) on behalf of the Kingdom of Saudi Arabia has extended the term for the deposit of USD 3 billion maturing on 05 December 2023 for another one year,” the SBP announced in a statement.

The extension of the term of the deposit is a continuation of the support provided by the kingdom to Pakistan, which will help to maintain the foreign currency reserves of Pakistan and contribute to the economic growth of the country, the statement added.

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

In November 2021, the SBP had signed an agreement with the Saudi Fund for Development (SFD) to receive $3bn, which would be placed in the central bank’s account with an aim to improve its foreign exchange reserves.

Pakistan’s economy has been grappling with its foreign reserves depleting quickly amid less inflows from the diaspora.

The country’s foreign exchange reserves held by the central bank dropped by $217 million to $7.180 billion in the week ending November 17, the SBP said, noting that commercial banks’ reserves had also fallen to $5.122 billion — bringing the country’s overall reserves to $12.302 billion.

However, the SBP attributed the drop in reserves to debt repayment in its weekly statement.

Meanwhile, Pakistan expects to secure a tranche of $700 million from International Monetary (Fund) under its loan programme after completing a first review.

Earlier it emerged that the the IMF executive board is likely to approve the staff-level agreement with Pakistan on December 07.

The IMF executive board meeting will likely be held on December 7 and is expected to consider Pakistan’s case in the meeting.

Sources said that after the approval from IMF’s Executive Board around US$700 million will be available to Pakistan, bringing total disbursements under the program to almost US$1.9 billion.