A deposit agreement between the Kingdom of Saudi Arabia, represented by the Saudi Fund for Development (SFD), and the Government of the Islamic Republic of Pakistan, represented by the State Bank of Pakistan (SBP), has been signed today by the Chief Executive Officer of SFD, H.E. Sultan Bin AbdulRahman Al-Marshad, and the Governor SBP, Dr. Reza Baqir, at the State Bank of Pakistan in Karachi, Pakistan.
Under this deposit agreement, SFD shall place a deposit of $3 billion with SBP. The deposit amount under the agreement shall become part of SBP’s Foreign Exchange Reserves. It will help support Pakistan’s foreign currency reserves and contribute towards resolving the adverse effects of the COVID-19 pandemic.
The deposit agreement reflects the strong and special relationship between the Kingdom of Saudi Arabia and Pakistan and will further augment the economic ties between the two brotherly countries.
Besides deposits of $3 billion, Pakistan’s government has been in talks with the Saudi government for importing oil on deferred payment to the tune of $1.2 billion, which means the payment against oil import will be made to the Saudi government in the later months.
The overall financial support from the Saudi government, along with over $1 billion tranches from International Monetary Fund (IMF), will give a cushion to foreign exchange reserves of the country, which witnessed consistent outflows of the Dollar on account of payment of debt services.
The fresh inflows from various sources will improve the level of foreign exchange reserves and Rupee parity against the Dollar, which is expected to drop below 170 as per forecast by various experts.