By Aamir Latif
KARACHI, Pakistan (AA) – Pakistan on Saturday received $3 billion from longtime ally Saudi Arabia to bolster its dwindling foreign reserves.
“Good news. $3 billion Saudi deposits received by SBP (State Bank of Pakistan). I want to thank His Excellency Crown Prince Mohammed Bin Salman and Kingdom of Saudi Arabia for the kind gesture,” Shaukat Tarin, adviser to the Pakistani prime minister on finance, said on Twitter.
The deposits, which are for one year at 4% interest, are part of a financial support package pledged by Saudi Arabia during Prime Minister Imran Khan’s October visit to Riyadh.
As soaring inflation and a sliding rupee wallop Pakistan’s tottering economy, Islamabad’s commitments for funding from the International Monetary Fund, which include withdrawal of tax exemptions and budget tightening, have led to growing anger among the population and put Khan’s government under increasing pressure.
Apart from the cash support, Saudi Arabia will also give Islamabad oil supplies worth $1.2 billion on deferred payments.
With the Saudi deposits, Pakistan’s foreign exchange reserves have gone up to $25.498 billion.
In 2018, Riyadh gave $3 billion in cash and a $3 billion oil facility to Pakistan to help shore up its depleted foreign exchange reserves.
However, Islamabad had to return $2 billion of the $3 billion as relations between the two allies deteriorated, mainly on the issue of the 2019 Kuala Lumpur Summit.
The summit, backed by countries including Malaysia and Turkey, was opposed by Saudi Arabia and the United Arab Emirates, who viewed it as a threat to their grip on the Muslim world.
Pakistan, which was among the initial supporters of the meeting, was forced to pull out of the summit due to Riyadh’s concerns.