ALBAWABA – The Kingdom of Saudi Arabia deposited $2 billion in the State Bank of Pakistan Tuesday to boost the country’s low foreign exchange reserves.
According to Agence France-Presse (AFP), a key International Monetary Fund (IMF) meeting with Pakistani officials is scheduled for later this month to approve a new deal.
Pakistan’s economy has been suffering a balance-of-payments crisis as the country attempts to service unsurmountable external debt.
Coupled with months of political chaos, bleak economic conditions and uncertainty have scared off foreign investment, AFP explained.
Inflation, on the other hand, has rocketed in Pakistan, with the Pakistani rupee down to a record low against the US dollar, AFP reported.
As a result, the country has been struggling with imports and is seeing a severe decline in industrial output, the news agency underscored.
"Saudi Arabia had announced in the recent past that it would deposit an additional $2 billion in the account of the State Bank of Pakistan – that has been credited to the account of the State Bank," Pakistan's finance minister Ishaq Dar said in a televised press conference.
This latest deposit brings state foreign reserves to a total of $6.5 billion, up nearly 50 percent from last week's account balance, as reported by AFP.
Faisal Shaji, a research analyst with Standard Capital Securities, told AFP that the deposit will stabilise Pakistan's foreign exchange reserves and will improve its credit rating in the international market.
"This is also a big and positive development towards the IMF program. As a result, Pakistan's currency will be strengthened and it will have a better impact on the stock market," he said.
Following months of negotiations, the IMF only last week announced a new standby deal worth $3 billion for Pakistan, after the government met the final conditions. Such conditions included securing guarantees of further financial support from friendly nations.
The standby deal will be considered for approval by the IMF's executive board by mid-July.
