Saudi Arabia on Friday deposited $1bn into Pakistan’s depleting foreign reserves, in the latest boost to help the country avert a balance of payments crisis.
The move was made as “part of an agreement” between the two countries, said Abid Qamar, a spokesman for Pakistan’s central bank.
In October, Saudi Arabia agreed to lend $6bn to Pakistan-half in deposits to the central bank’s reserves and the other half in deferred payments for oil shipments to the country. A second central bank official on Friday told the FT, the remaining $1bn committed to boost Pakistan’s liquid foreign reserves “will be delivered sometime in January ”.
Analysts say the Saudi commitment has won enough time for Pakistan to finalise a new loan with the International Monetary Fund. The next round of negotiations between representatives of Pakistan’s finance ministry and IMF officials is expected to be held by mid January. “We received some badly needed breathing space [with Saudi support] to press the IMF to accept our terms”, said the second central bank official.
Prime minister Imran Khan was elected in July this year on the back of promises to clamp down hard on corruption and reform the economy. But senior leaders of the ruling Pakistan Tehreek-I-Insaf (PTI) political party have warned privately that tough conditions attached to an IMF loan could undermine Mr Khan’s popularity.
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