UAE to deposit USD 3 billion in State Bank of Pakistan

PM Imran visited UAE for second time in November.

(Web Desk) - The United Arab Emirates has announced its intention to deposit US$3 billion in the State Bank of Pakistan to support the financial and monetary policy of the Islamic Republic of Pakistan, the Emirates News Agency reported on Friday.

In a statement, the Abu Dhabi Fund for Development said it will deposit the said amount in the coming days to enhance liquidity and monetary reserves of foreign currency at the Bank.

“The country’s support for Pakistan’s fiscal policy is based on the historical ties between the two people and the two friendly countries and the desire to further develop the bilateral cooperation in all fields,” the Emirates News Agency stated.

The Abu Dhabi Fund for Development has financed eight development projects in Pakistan with a total value of AED1.5 billion, including AED931 million in grants. The funds covered projects in sectors such as energy, health, education and roads.

In a message on Twitter, Prime Minister Imran Khan thanked UAE government for supporting Pakistan.

I want to thank the UAE govt for supporting Pakistan so generously in our testing times. This reflects our commitment and friendship that has remained steadfast over the years.

— Imran Khan (@ImranKhanPTI) December 21, 2018

Foreign Minister Shah Mahmood Qureshi thanked Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, on the twitter for the financial support.

In his tweet he said, "We thank His Highness Sheikh Mohamed bin Zayed for his generous financial support of US$ 3 Billion. This is a manifestation of the close fraternal ties between Pakistan and UAE which have always stood the test of time."

We thank Crown Prince H.H @MohamedBinZayed for his generous financial support of US$ 3 Billion. This is a manifestation of the close fraternal ties between Pakistan & UAE which have always stood the test of time.

— Shah Mahmood Qureshi (@SMQureshiPTI) December 21, 2018

‘HOPING TO GET DEFERMENT FOR OIL PAYMENTS’

Hours after the UAE announced it would lend $3 billion to shore up Pakistan’s foreign reserves, Pakistan is hoping the United Arab Emirates will offer further financial support through deferred oil payments.

“We are also hoping to get deferment for oil payments,” Information Minister Fawad Chaudhry told Reuters.

Chaudhry declined to disclose the sum of assistance through deferred oil payments, but said this was part of the discussions that led to the UAE announcing it would deposit $3 billion with Pakistan’s central bank.

Earlier on December 14, Pakistan received second tranche of financial package signed between Pakistan and Saudi Arabia.

Saudi Arabia has transferred the second installment of $1 billion in the State Bank of Pakistan “as balance of payment support” and by January, the country is expected to receive third and final installment, completing the promise of the kingdom.

The foreign exchange has depleted fast in last three months and about $1 billion has been wiped out since the arrival of first financial assistance of $1 billion.

State Bank reserves registered an increase after the second installment from Saudi Arabia, up by $1 billion to $8.2 billion, following the arrival of UAE financial assistance the central bank reserve might scale up to $11 billion.

Pakistan was facing a USD 12 billion financing gap for the current fiscal year. The government is keen to minimise the amount borrowed from the IMF by getting loans from friendly countries like Saudi Arabia, China and Malaysia as officials in Islamabad believe that the global lender could attach tough conditions.