File photo of Finance Minister Ishaq Dar
Finance Minister Ishaq Dar on Tuesday announced that Saudi Arabia has deposited $2 billion in the State Bank of Pakistan (SBP), adding the inflow will be reflected in the State Bank of Pakistan (SBP)’s foreign exchange reserves for the week ending July 14.
“The State Bank of Pakistan (SBP) has received a deposit of $2 billion from the Kingdom of Saudi Arabia,” he said in a brief press statement, as well as a posting on Twitter. “This inflow has increased the forex reserves held by SBP and will accordingly be reflected in the forex reserves for the week ending July 14, 2023,” he said.
“On behalf of P.M. Shehbaz Sharif, Chief of Army Staff Gen. Asim Munir, myself and the people of Pakistan, I extend our heartfelt thanks to the leadership of Kingdom of Saudi Arabia for their great gesture and support by placing said deposit of $2 billion with State Bank of Pakistan!” he added.
He also claimed that he expected more “positive developments” for Pakistan’s economy in the days to come. “We have reached stability,” he added.
Addressing an event in Peshawar, Prime Minister Shehbaz Sharif similarly thanked Saudi King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman for the receipt of the $2 billion deposit. He also lamented that Pakistan had opted for the IMF program out of “compulsion,” stressing that the country must wean itself off loans and begging and achieve self-sufficiency.
The inflow was released days after Islamabad reached a staff-level agreement with the International Monetary Fund (IMF) on a nine-month $3 billion stand-by arrangement. The global lender’s executive board would meet today (Wednesday) to sign off on the staff-level agreement, which would lead to the release of the first tranche of $1.1 billion.
The IMF deal has triggered a measure of economic stability, with the Pakistan Stock Exchange reaping dividends and the rupee’s decline against the dollar witnessing a halt. International credit rating agency Fitch also upgraded Pakistan’s long-term foreign currency issuer default rating from CCC- to CCC, noting this reflected the country’s improved external liquidity and funding conditions following the inking of the SLA with the IMF. However, it warned, risks persisted over the fiscal deficit and urged for structural reforms to help stabilize the country.