In a significant financial move, the Kingdom of Saudi Arabia (KSA) has transferred an amount of $2 billion to the State Bank of Pakistan (SBP). This inflow has increased the forex reserves held by SBP and will get reflected in the forex reserves for the week ending 14 July 2023.
A Tweeted Confirmation
Finance Minister Ishaq Dar confirmed this development through a tweet, stating:
“State Bank of Pakistan (SBP) has received a deposit of $2 billion from the Kingdom of Saudi Arabia. This inflow has increased the forex reserves held by SBP and will accordingly be reflected in the forex reserves for the week ending 14 July 2023” — Ishaq Dar (@MIshaqDar50) July 11, 2023
Acknowledgment of Support
The Finance Minister also expressed gratitude towards all the key stakeholders involved in the process, with an emphasis on the Kingdom of Saudi Arabia for their substantial financial support. He tweeted:
“On behalf of PM @CMShehbaz, COAS @_GenAsimMunir, myself @MIshaqDar50 and the People of Pakistan, I extend our heartfelt thanks to the leadership of the Kingdom of Saudi Arabia for their great gesture and support by placing said deposit of $2 billion with the State Bank of Pakistan!” — Ishaq Dar (@MIshaqDar50) July 11, 2023
Impact of the Financial Inflow
This deposit opens up a real opportunity for Pakistan, which has been struggling with a financial crisis, to gain a significant bailout from the International Monetary Fund (IMF) in the near future.
Reflecting Improved Conditions
Interestingly, these inflows also indicate a betterment in Pakistan’s external liquidity and funding conditions, following its Staff-Level Agreement (SLA) with the IMF for a nine-month Stand-by Arrangement (SBA) in June.
Despite these positive developments, the implementation of the program and the risks associated with external funding continue to be a concern due to the ongoing political turmoil and extensive external financing requirements.
A Crucial Meeting
The IMF’s Executive Board has a scheduled meeting on 12 July (Wednesday), with a high probability of approving the release of an initial tranche of $1.1 billion.
The deposit of $2 billion from the Kingdom of Saudi Arabia is indeed a crucial financial boost for Pakistan. It not only helps in increasing the forex reserves but also opens up a possibility for receiving an important bailout from the IMF. While challenges persist, this support from KSA is a step in the right direction towards stabilizing Pakistan’s economy.
The article is based on the tweets by Ishaq Dar, the Finance Minister of Pakistan, and other related articles. The actual figures and developments may vary.