In a major relief for the cash-starved country, Pakistan inked an agreement with the Saudi Fund for Development (SFD) on Thursday to finance oil derivatives worth $1 billion.
The news comes on day when the United Arab Emirates agreed to rollover the current $2 billion loan and provide another $1 billion as Prime Minister Shehbaz Sharif held a meeting with UAE President Sheikh Mohamed bin Zayed Al Nahyan in Abu Dhabi.
According to the details, the Ministry of Economic Affairs signed the agreement with the SFD – a Saudi Arabian government agency that provides assistance to developing countries.
The Economic Affairs Division, in a tweet, said Secretary Ministry of Economic Affairs Dr Kazim Niaz and SFD Chief Executive Officer Sultan Abdulrahman Al-Marshad signed the deal.
Some days back, a Saudi news channel had reported that two countries were likely to ink an agreement of over $1 billion dollars in the days ahead in the oil sector.
“The coming days will witness the signing of an agreement between the Kingdom and Pakistan through the Saudi Development Fund for Development with an increase of one billion dollars,” Nawaf Al-Maliki, Saudi Arabia’s Ambassador to Pakistan, was quoted as saying by Al-Khabaria.
On Tuesday, Saudi Arabia’s Crown Prince Mohammed bin Salman had directed the authorities concerned to study increasing the kingdom’s investments in Pakistan to $10 billion. He also directed the SFD to study boosting the Saudi deposit to Pakistan’s Central Bank to $5 billion.
The investments in Pakistan were previously announced in August last year while the Saudi deposit to the country’s central bank was extended in December.
According to the Saudi Press Agency (SPA), the directives from Crown Prince Salman – commonly known as MBS – affirms the kingdom’s position in supporting the economy of Pakistan and its people.
It comes within the framework of the existing communication between the crown prince and Prime Minister Shehbaz Sharif, the SPA added.
Last month, the SFD had extended the term for the $3 billion deposit in the State Bank of Pakistan (SBP) which was set to mature on December 5.
The State Bank of Pakistan (SBP) had signed an agreement with the SFD in November 2022 to receive $3 billion, to be placed in the central bank’s account with an aim to improve the country’s foreign exchange reserves.
Similarly, Finance Minister Ishaq Dar had told media said that Saudi Arabia and China were set to boost Pakistan’s foreign exchange reserves much before the close of this month.
“Our foreign exchange reserves by end-June would be much better than you can think,” he told a press conference in Islamabad.
He said the IMF programme would be completed at all costs, China and Saudi Arabia would enhance their support, government-to-government disinvestments would be completed, and the current account deficit would be about $3 billion less than earlier projections.
Dar recalled that China and Saudi Arabia, during Prime Minister Shehbaz Sharif’s visits in September, had agreed to increase their support to Pakistan, and the Saudi finance minister later confirmed this to international news agencies.
He said the process got delayed, but Saudi Arabia would increase its support much earlier than the end of this month, while the Chinese loan rollover was also being processed.