Money to increase foreign exchange reserves, improve economic outlook
Pakistan has finally received the $3b Saudi loan as a part of a $4.2b Saudi package, Advisor to the PM on Finance and Revenue Shaukat Tarin confirmed on Saturday.
The Saudi Development Fund has deposited the money with the State Bank of Pakistan, increasing Pakistan’s foreign exchange reserves.
“Good news, US$3 billion Saudi deposit received by SBP. I want to thank His Excellency Crown Prince Mohammed Bin Salman and Kingdom of Saudi Arabia for the kind gesture,” Tarin said in a tweet.
Good news, US$3 billion Saudi deposit received by SBP. I want to thank His Excellency Crown Prince Mohammed Bin Salman and Kingdom of Saudi Arabia for the kind gesture.— Shaukat Tarin (@shaukat_tarin) December 4, 2021
Last week, Federal Information Minister Fawad Chaudhry had said that the money would be released to Pakistan in a week. The Saudi deposit will not only improve foreign exchange reserves but also ease the pressure on the rupee against the US dollar.
In October, during Prime Minister Imran Khan’s visit to Riyadh, the Saudi government had announced a $4.2 billion package that includes $1.2b oil on deferred payment facility.
The procedure for oil on deferred payment is being finalized, SAMAA TV‘s Shakeel Ahmed says.
Saudi money comes in the form of a loan and Pakistan will be paying a comparatively high interest-rate.
Last month, when the federal cabinet approved the Saudi loan a spokesperson of the federal finance ministry told SAMAA Digital that Pakistan has secured the $3b loan from Saudi Arabia at an interest rate of 4% while the $1.2b oil on deferred payment facility has been secured at an interest rate of 3.8%.
The loan has been secured under tough conditions. Pakistan will have to repay the money after one year. Saudi Arabia may also require a refund on a three-day notice.
The Saudi money will likely improve the economic outlook of the country. The Pakistan Stock Market (PSX) on Thursday fell sharply haemorrhaging 2,100 points and Rs332 billion on reports of ballooning trade deficit and a possible increase in the policy rate.
After the market jolts on Thursday, analysts predicted that the deposit from Saudi Arabia and the IMF loan tranche of $1b will bring back stability.