ISLAMABAD: Pakistan and Saudi Arabia, represented by the Saudi Fund for Development (SFD), on Monday formally signed an agreement under which SFD will deposit $3 billion in the State Bank of Pakistan (SBP).
In October, SFD announced a financial package of $4.2 billion to help the South Asian nation as it struggled with depleting foreign reserves. The amount includes suppling $1.2 billion worth of oil to Pakistan on credit.
A deposit agreement was signed in Karachi by SFD Chief Executive Officer Sultan Bin AbdulRahman Al-Marshad and SBP Governor Dr. Reza Baqir, the SBP said in a statement on Monday.
“The deposit amount under the agreement shall become part of SBP’s Foreign Exchange Reserves. It will help support Pakistan’s foreign currency reserves and contribute toward resolving the adverse effects of the COVID-19 pandemic,” the statement said.
Pakistan and Saudi Arabia enjoy deep-rooted strategic ties. Around 2.5 million Pakistani expats are living in the kingdom, and are the biggest single source of foreign remittances to the South Asian nation.
Saudi Arabia also supported Pakistan in 2019 with $3 billion deposits and a $1.2 billion deferred oil payments facility.
“The deposit agreement reflects the strong and special relationship and will augment economic ties between the two brotherly countries,” the SBP said.