Saudi development agency extends term of $3 billion deposit with Pakistan's central bank

A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, on May 19, 2022. (AFP/File)

• The deposit originally aimed to help Pakistan deal with financial repercussions in the wake of COVID-19
• The Saudi Development Fund hopes the decision will help Pakistan handle external sector challenges

KARACHI: Pakistan's central bank said on Friday the Saudi Fund for Development (SFD) had extended the term of a $3 billion deposit to shore up the country's economy which is currently going through a rough patch.
The deposit was made under an agreement signed between the State Bank of Pakistan and the Saudi development agency in November 2021 to support the South Asian state's dwindling foreign exchange reserves.
The Pakistani central bank announced in a Twitter post last September the SFD had confirmed the deposit's rollover for another year.
"The extension of the term of deposit is a continuation of the support provided by the government of the Kingdom of Saudi Arabia to the Islamic Republic of Pakistan," the State Bank said in a statement.
It noted the deposit originally aimed to help Pakistan deal with financial repercussions in the wake of the COVID-19 pandemic.
The Saudi development agency also hoped in a Twitter post that its decision would make it easier for Pakistan "to meet external sector challenges & achieve sustainable economic growth."
According to Pakistan's central bank, the country's total liquid foreign reserves stood at $13.4 billion on November 25. The foreign exchange held by the State Bank amounted to $7.5 billion while the rest of it was with various commercial banks.
"It is a crucial development for Pakistan's economy since the amount of $3 billion is quite considerable," Dr. Khaqan Najeeb, former advisor to the finance ministry, told Arab News. "With $7.5 billion on November 25, Pakistan needs to ensure that the money deposited by all friendly countries is rolled over."
The development was also applauded by people from other walks of life, including the country's religious community that said Saudi Arabia had always cooperated with Pakistan.
"As a result of the meetings held between Pakistan's Prime Minister Shehbaz Sharif and Saudi Crown Prince Mohammed bin Salman, it is clear that investment and cooperation from Saudi Arabia in Pakistan will further increase in the coming days," said chairman of the Pakistan Ulema Council Hafiz Muhammad Tahir Ashrafi.
He added the country was expected to hear "good news in the near future" from other Muslim countries like the United Arab Emirates, Qatar and Turkey.