Finance Minister Ishaq Dar announced Tuesday that Pakistan had secured $2 billion in aid from Saudi Arabia, following a recent agreement with the International Monetary Fund (IMF).
“Last Friday, our reserves were under $10 billion, hovering around $9.67 billion. You can estimate them to be nearly $11.67 billion,” Dar commented.
He anticipates this $2 billion from Saudi Arabia to be reflected in the State Bank’s reserves by the end of the week.
In expressing appreciation to Saudi Arabia, especially King Salman and Crown Prince Muhammad bin Salman, Dar spoke on behalf of Prime Minister Shehbaz Sharif and Chief of Army Staff General Syed Asim Munir. He praised Saudi Arabia’s consistent support of Pakistan and confirmed the deposit’s receipt by the State Bank of Pakistan.
Positive Developments on the Horizon
Looking ahead, the finance minister predicts more positive news that will contribute to stabilising the nation’s economy. It’s worth noting that as of last Friday, foreign exchange reserves improved for two weeks, reaching $4.4 billion.
While acknowledging the reserves are substantially higher due to commercial banks, Dar said Saudi Arabia’s financial backing would enhance the foreign exchange reserves, which had previously only been sufficient for one month’s worth of imports.
As the IMF executive board is set to approve Pakistan’s staff-level agreement on July 12, Pakistan can anticipate a $3 billion stand-by arrangement. This fund, although short-term, provides relief to Pakistan as it contends with a severe balance of payments crisis and declining foreign exchange reserves.
Despite these measures, Pakistan’s currency continues to weaken, following a 14% decrease in workers’ remittances to $27 billion in the fiscal year ending June 30, 2023. This decrease is partly due to illegal markets offering better rupee-dollar rates, leading to a diversion of funds and impacting foreign exchange reserves, currently critically low at $4.4 billion. In response, the government has implemented import controls to secure the repayment of maturing foreign debt.
Read: Overseas Pakistanis Remit $2.2bn in June: State Bank of Pakistan
