ISLAMABAD: Saudi Arabia has rolled over $5 billion in cash deposits with Pakistan for three years, finance ministry and central bank officials said on Thursday, providing crucial relief as Islamabad seeks to stabilize its fragile foreign exchange reserves.
The extension underscores Saudi Arabia’s role as one of Pakistan’s most important economic partners and external financiers. Along with China and the United Arab Emirates, the kingdom has repeatedly rolled over loans, deposits and other financial support that have helped Pakistan avert balance-of-payments crises, shore up foreign exchange reserves and meet financing assurances required under successive International Monetary Fund (IMF) programs. The IMF said earlier this year that the extension of the Saudi deposit from one year to three years would strengthen Pakistan’s external financing outlook and support the country’s reform program.
Saudi Arabia has placed deposits with the State Bank of Pakistan (SBP) during previous periods of acute external financing stress and has regularly renewed them as Pakistan grappled with high debt repayments and low foreign exchange reserves. Riyadh has also provided oil financing and other economic assistance over the years, making it one of Islamabad’s most reliable financial partners.
“Saudi Arabia has rolled over $5 billion cash deposits for three years,” a finance ministry official confirmed to Arab News on condition of anonymity because he was not authorized to speak to the media.
The official, however, declined to confirm whether an additional $3 billion Saudi cash deposit that matured this month had also been extended.
A source at the State Bank of Pakistan (SBP), also speaking on condition of anonymity, independently confirmed the extension of the $5 billion deposit.
Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani and the SBP spokesperson did not respond to Arab News requests for comment on either the $5 billion extension or the status of the additional $3 billion deposit.
SBP Governor Jameel Ahmad told local media on Wednesday that the extension significantly reduces Islamabad’s immediate financing burden.
“Pakistan’s external sector pressure has subsided after Saudi Arabia rolled over a $5 billion debt for three years, coupled with $9 billion in foreign currency purchases from the local market in the last fiscal year,” Ahmad was quoted as saying by The Express Tribune.
In April, Finance Minister Aurangzeb announced that Saudi Arabia had agreed to provide Pakistan with an additional $3 billion deposit while extending the maturity of the existing $5 billion deposit beyond its previous annual rollover arrangement. The fresh support came as Pakistan worked to strengthen its external accounts under its IMF-backed reform program.
Ahmad also said this week friendly countries had rolled over around $6 billion in external obligations during July, helping improve Pakistan’s external financing outlook.
