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The Saudi Fund for Development (SFD) on Sunday confirmed the rollover of a $3 billion deposit for Pakistan by a year, with the State Bank of Pakistan (SBP) saying this reflected the strong ties between the two nations.
“Saudi Fund for Development has confirmed rollover of $3 billion deposit maturing on Dec. 5, 2022 for one year,” read a brief statement posted by the central bank on Twitter. “Deposit is placed with SBP and is part of its foreign exchange reserves,” it said. “This reflected continuing strong and special relationship between Saudi Arabia and Pakistan,” it added, while sharing a statement from November 2021 when the deposit had been initially provided to the SBP.
The Gulf kingdom and Pakistan inked an agreement for the deposit under the ousted government led by the Pakistan Tehreek-e-Insaf (PTI) in November 2021 to support Islamabad’s foreign currency reserves and help the country overcome the adverse effects of the COVID-19 pandemic. The incumbent government, led by Prime Minister Shehbaz Sharif and comprising a coalition of several major political parties, had previously announced that it expected Riyadh to rollover the loan, noting it would help stabilize the national economy.
Pakistan’s foreign exchange reserves have been on a persistent slide this year, with the central bank reporting last week that they were currently at $8,624.0 million, barely sufficient for a little over a month of imports. The reserves have come under additional pressure in recent weeks amidst a consistent daily decline in the Pakistani rupee’s value against the U.S. dollar, with the local currency hitting Rs. 236.84 against the greenback in interbank trade at close on Friday, just Rs. 3 short of its all-time lowest value of Rs. 239.9—recorded in July.
Despite multiple claims from the incumbent government of the revival of a stalled bailout from the International Monetary Fund (IMF) stabilizing the exchange rate, the opposite has been observed, with the rupee reporting a sustained decline since the Extended Fund Facility was restored earlier this month.