Pakistan, Saudi Arabia may ink deal for $2bn deposits after Eidul Fitr
Business
The country's forex reserves clock in at merely $4.3bn as of April 14
LAHORE (Web Desk) - Pakistan is likely to ink a deal for additional deposits of $2 billion from the Kingdom of Saudi Arabia (KSA) after Eidul Fitr, Dunya News has learnt on good authorities.
The 'cash-strapped' country is desperately eying for deposits to shore up depleting foreign exchange reserves and support fragile economy. The country's forex reserves clock in at merely $4.3bn as of April 14, 2023.
Sources told Dunya News that the State Bank of Pakistan (SBP) would sign a deal with the Saudi Fund for Development (SFD) soon after Eid for an additional $2 billion deposit.
They said the kingdom had confirmed bilateral assistance support to the International Monetary Fund (IMF), which was also acknowledged by the lender's staff. This agreement is the follow-up on the confirmation of additional financial support of $2bn and $1bn from KSA and the UAE, he added.
Saudi Arabia has already rolled over $3bn in deposits for one year, which matured on December 5, 2022. This $3bn deposit is part of foreign exchange reserves of $4.43bn, lying with the central bank.
This $3bn deposit and $1.2bn oil facility on deferred payment were provided by the KSA in November 2021 during the tenure of the PTI government.
Also Read: Pakistan receives $1bn financing commitment from UAE ahead of IMF deal
Saudi Arabia has so far provided $782.82 million in the shape of an oil facility during the first nine months (July-March) of the current fiscal year 2022-23.
-- Respite for Pakistan as IMF 'receives' $2bn assurance from Saudi Arabia --
Pakistan moved one step closer to the revival of the crucial bailout package of the International Monetary Fund (IMF) as Saudi Arabia has provided assurance for $2 billion in additional deposits to the global lender.
The IMF has informed the Pakistani authorities about the confirmation, one of the major demands for resuming the loan deal stalled since last year.
Pakistan’s loan programme is yet to materialize months after it imposed additional taxes and increased energy prices and allowed free floating of currency to meet conditions laid forth by the IMF. The nation has missed multiple deadlines to revive the deal. The Washington-based lender has asked the cash-strapped Pakistan to seek commitments for new loans from Saudi Arabia and the United Arab Emirates (UAE) before it releases the funds.
Reports said the Kingdom is yet to make an official announcement in this regard. It is expected that the Saudi government would announce the new loans for Pakistan during upcoming visit of Prime Minister Shehbaz Sharif.
Pakistan is now looking towards the UAE to secure another $1 billion deposit in order to reach the staff-level agreement (SLA) with the IMF.
Finance Minister Ishaq Dar is likely make a stopover in the UAE on his way to the US where he would hold talks on revival of the loan deal.
Earlier, the IMF’s resident representative for Pakistan has said the country has a few more tasks to complete to meet requirements for a $6.5 billion bailout.
The economic turmoil could worsen if the IMF bailout is delayed further as foreign exchange reserves continue to deplete. Total foreign reserves stand at $9.82 billion with the State Bank of Pakistan holding only $4.24 billion, which is barely enough to cover three weeks of imports.
The sources said that IMF has also demanded reduction in petrol and diesel imports, also they are asking to cover up the shortfall in petroleum levy and taxes.
