ISLAMABAD: State Bank of Pakistan (SBP) Governor Dr. Reza Baqir has said long-time ally Saudi Arabia announcing a package of $4.2 billion for Pakistan would help support the country’s “external development” over and above an International Monetary Fund bailout, local media reported on Saturday.

Saudi Arabia announced on Tuesday $3 billion to support Pakistan’s foreign reserves, as well as extending financing of oil derivatives trade for a total of $1.2 billion during the year.

Pakistan has also been in talks with the IMF for over two weeks to secure a $1 billion funding tranche, but its sixth review remained inconclusive.

“These [support from friendly countries] are the measures that over and above the IMF engagement are going to further support our external development,” the SBP chief was quoted by The News as saying about the Saudi package at the Pakistan Banking Awards 2021.

Baqir also said the government and the IMF would soon announce the agreement to resume the $6 billion loan program and the release of the latest tranche of $1 billion.

“The adviser to the prime minister on finance [Shaukat Tarin] has said clearly that we are very soon about to announce the agreement with the IMF for the next review,” he said.”The determination expressed by the government of Pakistan that we see the journey ahead in partnership with the IMF ... it is also the fact that we have confidence in the direction on our policies.”

Baqir said the country’s economy has performed much better than predicted by the IMF last year, adding that the country’s GDP growth, current account deficit, foreign exchange reserves, and external debt were in a better position than IMF projections.

“Back in June 2019 when the IMF started the program with Pakistan, it projected our growth would be 3 percent in FY2021, instead the economy of Pakistan grew nearly 4 percent in the fiscal year that closed in June 2021,” Baqir said.

“For the current account deficit, the IMF projected we have a deficit of 1.7 percent of GDP, but we had a deficit of 0.6 percent. For workers’ remittances, the IMF projected a number of around $23 billion, but we closed the year with $29 billion in remittances.”

The governor said he was optimistic about the country’s economic growth prospects, saying he expected the economy to grow around 5 percent in the fiscal year 2021-22.

The World Bank had lowered Pakistan’s GDP growth projection to 3.4 percent in its latest report titled ‘Pakistan Development Update: Reviving Exports’.

“The economy grew about 4 percent in the last fiscal year, and we expect it to grow close to 5 percent in the current fiscal year; that is a welcome challenge for us,” Baqir said.

In partnership with the government, the central bank was taking measures to support economic growth without compromising the sustainability of the external sector, the governor said.