KARACHI: In a significant move, Saudi Arabia has extended the term of its $3 billion deposits with Pakistan for an additional year to further support Pakistan’s economy.
The deposits placed with the State Bank of Pakistan (SBP) were being matured on Thursday, however, on the federal government’s request, Saudi Arabia has announced to extend its term for another one year.
The $3billion deposit agreement was initially signed with Saudi Fund for Development (SFD) in the year 2021 and subsequently rolled over in 2022 and 2023, after the issuance of the royal directives that reflect the continuation of the close relationship between the two brotherly countries, SBP said.
According to SBP, the Saudi Fund for Development (SFD) on behalf of the Kingdom of Saudi Arabia has extended the term for the deposit of $3 billion maturing on 05 December 2024 for another year. The said amount has been placed with the State Bank on behalf of Islamic Republic of Pakistan.
According to SBP, the extension of the term of the deposit is continuation of the support provided by the Kingdom of Saudi Arabia to the Islamic Republic of Pakistan, which will help in strengthening the foreign exchange reserves of Pakistan and contribute to the country’s economic growth and development.
Analysts said that this is a positive development on economic front and will help maintain the SBP’s reserves at their current level while also supporting the external account, which is already in surplus.
Overall, Pakistan’s current account is surplus of $218 million in the first four months of the current fiscal year (FY25), in contrast to a deficit of $1.528 billion in the same period of the previous fiscal year.
The federal government is making efforts to bring more inflows to build the foreign exchange reserves of the country and rejoined IMF’s 37-month Extended Fund Facility (EFF) program of about $7 billion and the first tranche of $1.03 billion has already arrived.
Copyright Business Recorder, 2024
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