- Mandate extension reflects Saudi Arabia’s continued support for Pakistan: SBP.
- “Act to contribute to the economic growth and development of the country. »
- The $3 billion deposit agreement was also extended to 2022 and 2023.
The Saudi Fund for Development (SFD), on behalf of the Kingdom of Saudi Arabia, has extended the duration of the $3 billion deposit maturing on December 5, 2024 by one year, the State Bank announced on Thursday of Pakistan.
This development follows the meeting of Prime Minister Shehbaz Sharif and Crown Prince of Saudi Arabia Mohammad Bin Salman during the former’s visit to Riyadh two days ago on the sidelines of the ‘One Water Summit’.
During the meeting, the two leaders agreed to bring about a qualitative change in economic, trade and investment relations between the two countries.
They also expressed satisfaction over the pace of progress in the implementation of Saudi Arabia’s MoUs and agreements regarding investments in Pakistan.
In its statement today, the central bank said, “The said amount has been placed with the State Bank of Pakistan on behalf of the Islamic Republic of Pakistan. »
“The extension of the term of the deposit is a continuation of the support provided by the Kingdom of Saudi Arabia to the Islamic Republic of Pakistan, which will help strengthen Pakistan’s foreign exchange reserves and contribute to economic growth and development of the country,” he added.
It is worth noting that the $3 billion deposit agreement was initially signed with the SFD in 2021 and then renewed in 2022 and 2023, after the publication of the royal directives which reflect the continued close relations between the two brotherly countries , as by the central bank.
Besides receiving financial assistance from the kingdom, Pakistan signed several memorandums of understanding worth $2 billion in October to boost bilateral trade and investments with Saudi Arabia.
The agreements were signed during a three-day visit by a high-level Saudi delegation led by the kingdom’s investment minister.
The agreements included a $70 million investment in the agricultural sector, the creation of advanced semiconductor chip manufacturing in Saudi Arabia, the creation of a textile industry, a white oil pipeline project, a protocol of agreement to explore investment opportunities, a hybrid energy project, development of transformer manufacturing facilities. in both countries, cybersecurity measures for customers and businesses, as well as export of spices and vegetables from Pakistan.
Additionally, the agreements provide for the establishment of a manufacturing plant for surgical and dental equipment and collaboration on the federal government’s E-Taaleem and digitalization programs.
The country was on the brink of default in 2022, but that was averted after the International Monetary Fund (IMF) approved a short-term bailout package with strict conditions – sending inflation soaring as Pakistan was undertaking several structural reforms, which resulted in an increase in gas production. , energy and fuel prices.
Later in September this year, the Fund’s Board approved $7 billion in financing for Pakistan under its Extended Financing Facility (EFF) and disbursed the first tranche of $1.1 billion .
Islamabad has been heavily dependent on the IMF bailout for years, at times being on the brink of sovereign default and having to turn to countries like the UAE and Saudi Arabia to provide the financing needed to meet external financing targets set by the IMF.