Saudi Arabia is close to finalizing the extension of its $3 billion deposit in the State Bank of Pakistan (SBP), Reuters has reported.
“We are currently finalizing extending the $3 billion deposit to Pakistan,” the news agency quoted the Saudi Minister of Finance Mohammed al-Jadaan as saying. The minister, however, offered no further details.
Last year, Saudi Arabia deposited $3 billion in the State Bank of Pakistan to help support its foreign reserves. In addition, Pakistan had also signed an agreement worth $1.2 billion for the import of petroleum products on deferred payments.
The country’s yawning current account deficit and fall in foreign reserves have forced it 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 fallen to just $10.16 billion.
Uncertainty over the revival of an International Monetary Fund (IMF) programme has compounded volatility in the economy and markets amid a political crisis since a new coalition government took over last month. The ongoing talks between Pakistan and IMF are likely to conclude in the coming days.
Following Prime Minister Shehbaz Sharif’s visit to Saudi Arabia, in a joint statement, both countries had said that they will discuss the possibility 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 enhance the financing of petroleum products and support the economic reforms for the benefit of Pakistan.