Saudi Arabia is now close to finalizing the extension of its $3 billion deposit in the State Bank of Pakistan (SBP), according to reports. “We are currently finalizing extending the $3 billion deposit to Pakistan,” stated the Saudi Minister of Finance Mohammed al-Jadaan. The minister, however, offered no further particulars. Last year, Saudi Arabia deposited $3 billion in the State Bank of Pakistan to help stabilize its foreign reserves.
The Extension of the $3 Billion Deposit Will Stabilize the Everyday Plunging Foreign Reserves
In addition to the $3 billion deposit, Pakistan had also signed an agreement worth $1.2 billion for the import of petroleum products on deferred payments. Pakistan’s weakening current account deficit and fall in foreign reserves has forced the government to look for external finances. According to the State Bank of Pakistan’s (SBP) latest weekly report, the country’s total liquid foreign exchange reserves currently stand at $16.16 billion. However, the SBP reserves have plunged to just $10.16 billion.
Wavering over the resurgence of an International Monetary Fund (IMF) programme has brought volatility in the economy and markets amid a political crisis since a new coalition government of Shehbaz Sharif took over last month. The current talks between Pakistan and IMF are likely to conclude in the coming days.
Both Pakistan and Saudi Arabia Will Explore More Options Concerning Oil Trade
Following Prime Minister Shehbaz Sharif’s visit to Saudi Arabia, in a joint statement, both countries had said that they will discuss the prospect of augmenting the $3 billion deposit with Pakistan’s central bank. The statement further said that the two countries will also explore options to further improve the financing of petroleum products and support the monetary reforms for the benefit of Pakistan.
Read more: Pakistan and Saudi Arabia Discuss Extending the Term of the $3 Billion Deposit in Central Bank