Saudi Arabia has fulfilled its commitment to provide financial support to Pakistan by depositing $2 billion into the country's central bank, according to a statement from the Pakistani government. This infusion of funds comes at a crucial time as Pakistan faces financial challenges and prepares for a significant meeting with the International Monetary Fund (IMF) regarding a potential bailout package.

Pakistani Finance Minister Ishaq Dar, in a video statement, expressed gratitude for Saudi Arabia's support, emphasizing that the deposit will bolster the country's foreign exchange reserves. The deposit, which is not classified as a loan, will contribute to strengthening Pakistan's reserves and will be held by the central bank for a minimum duration of one year.

This development coincides with an upcoming meeting of the IMF's executive board, which is expected to convene to discuss and potentially approve a new loan worth $3 billion for Pakistan. The loan is seen as vital for Pakistan to address its ongoing economic crisis and stabilize its financial situation.

According to Finance Minister Ishaq Dar, following the deposit from Saudi Arabia, Pakistan's foreign exchange reserves, which had fallen to $9.6 billion last week, have now increased to $11.6 billion. This substantial boost brings some relief as the reserves were previously at a level barely sufficient to cover the country's import bills for a month. “We thank the Saudi leadership on behalf of the government and people of Pakistan,” he said.

He assured the nation that Pakistan would soon return to the path of growth. “God willing, now Pakistan’s economy will witness an improvement,” Dar said.

Prime Minister Shehbaz Sharif took to Twitter to express his heartfelt appreciation, conveying his "deep gratitude to the leadership and brotherly people of the Kingdom of Saudi Arabia." He further emphasized that the deposit signifies Saudi Arabia's increasing confidence in Pakistan's economic resurgence.

“We remain committed to making all necessary efforts to improve Pakistan’s economy,” Sharif said.

During a meeting with Saudi Ambassador to Pakistan, Nawaf bin Said Al-Malki, Prime Minister Shehbaz Sharif commended the Kingdom's unwavering and generous support for Pakistan, acknowledging its instrumental role in securing the deal with the International Monetary Fund (IMF), as stated in a government statement. Sharif expressed his gratitude to Saudi Crown Prince Mohammed bin Salman for the deposit, recognizing its significance.

The IMF agreed to provide a much-needed relief package of $3 billion to Pakistan, aiming to assist the country's struggling economy. The agreement, spanning nine months, is expected to be approved by the IMF's executive board at a meeting in the United States. Pakistan is also hopeful that the board will approve the release of a crucial $1.1 billion from the bailout package.

Pakistan has faced significant economic challenges in recent times, including the devastating floods that occurred last summer, resulting in the loss of numerous lives, extensive damage amounting to $30 billion, and affecting millions of Pakistanis. The country has also been impacted by a surge in international commodity prices following Russia's conflict in Ukraine.

The initial bailout deal was signed between the IMF and Pakistan's former Prime Minister, Imran Khan, in 2019, with an expiration date set for June 30. However, a breakthrough agreement was reached, leading to the announcement of a new agreement.

Image source: Arab News