Pakistan to receive $3bn from Saudi Arabia this week

• Saudi Arabia to transfer $3 billion to Pakistan this week after all legal formalities were earlier finalised.
• Cash deposit will help Pakistan shore up its forex reserves.
• Saudi Arabia will charge around 3.2-3.5% markup on annual basis for the deposit.

ISLAMABAD: Minister for Information and Broadcasting Fawad Chaudhry Thursday announced that all legal arrangements have been finalised for $3 billion deposits from Saudi Arabia and the amount would be released during the ongoing week.

Making the announcement on Twitter, the information minister said that Saudi Arabia has also allowed direct flights from Pakistan.

During PM Imran Khan’s visit earlier in October, Riyadh had agreed to revive its financial support to Islamabad, including about $3 billion in safe deposits and $1.2bn worth of oil supplies on deferred payments.

At a time when the country’s foreign exchange reserves were on the decline, this Saudi facility in the shape of $3 billion deposits would help the State Bank of Pakistan (SBP) shore up its dwindling foreign exchange reserves.

“The SBP has finalised all arrangements and now everything is in place and the amount of the agreed deposit will be received within the next couple of days,” top official sources confirmed while talking to The News.

Saudi Arabia will charge around 3.2 to 3.5% markup on annual basis for this deposit amount.

According to the central bank, Pakistan’s total liquid foreign reserves stood at $22.773 billion on November 19, 2021. The break-up of the figures shows that foreign reserves held by the SBP were standing at $16.254 billion and net foreign reserves held by commercial banks were standing at $6.519 billion.

During the week ended on November 19, 2021, the SBP's reserves decreased by $691 million to $16.254 billion, mainly due to external debt repayments.

Official sources also said Saudi Arabia has agreed to provide $1.2 billion for the provision of refined POL products and the Economic Affairs Division (EAD) was negotiating on behalf of the government of Pakistan.

Responding to queries, Spokesperson for Adviser to PM on Finance Muzammil Aslam said Pakistan was likely to get $7 billion from just three sources during the next 60 days. 

These include the $3 billion deposits from Saudi Arabia, $1.2 billion Saudi Oil Facility on deferred payments, $800 million oil facility from the Islamic Development Bank, $1 billion through the launching of Sukuk bond and $1 billion from the IMF.

All such dollar inflows would be enough to ward off pressures on existing import bills, he added.