Saudi Arabia has once again come to the rescue of Pakistan as it seeks to renew the $3 billion assistance to Pakistan in the form of safe deposits till December 2023, revealed sources from the Ministry of Finance.
Pakistan will pay a 3 percent interest on the safe deposit of the amount and the country is bound to return the money immediately in the case of default risk, they added.
The sources clarified that the money kept under the safe deposit will not be used. The same was announced by Saudi Minister in May this year, however, it had been reiterated and confirmed between the two governments. The final announcement or that is still to be made by Saudi government.
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Commenting on the renewal of the assistance, Minister of State for Finance, Dr. Aisha Ghaus Pasha said that the agreement to expand safe deposits between Pakistan and Saudi Arabia will be finalized soon. She appreciated the friendly relations with Saudi Arabia saying that the country will also provide $100 million of oil per month on loan. Saudi Arabia will get $1 billion worth of oil on deferred payments in 10 months, she added.
The dangers of reduction in domestic foreign exchange reserves have begun to avert. Saudi deposits can only be used to stabilize foreign exchange reserves.
The agreement will pave the way for the disbursement of the $1.2 billion from the International Monetary Fund under the Extended Fund Facility (EFF) program. The IMF’s Executive Board will make its final decision on 25 August.
The international money lender had been assessing Pakistan’s funding gap of $4 billion and had demanded the Pakistani government to fund the gap as a prior condition to the approval. The Federal Minister of Finance and Revenue, Miftah Ismail had also assured the media that the condition would be met as he claimed that the country had over $8 billion in the pipelines during a press conference in Islamabad.
International experts say that the funding from Saudi Arabia and other friendly countries is crucial for Pakistan as it must pay a debt of $1.7 billion by December to avoid default. However, the Finance Minister claims that Pakistan has averted any risk of default and now the country would move towards stability. He has repeatedly said that the Pakistani economy faced a meltdown due to a high current account deficit under the PTI government and with the implementation of new policies, the economy would experience more stability.
