Saudi to deposit $3 billion in State Bank to boost Pakistan’s forex reserves

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CAIRO: The Saudi Fund for Development said it was depositing $3 billion in State Bank of Pakistan (SBP) to help support its foreign reserves, the kingdom’s state news agency reported on Tuesday.

The fund added that an official directive was issued to supply $1.2 billion to finance Pakistan’s oil products trade during the year.

The news was confirmed by Information Minister Fawad Chaudhry and Energy Minister Hammad Azhar.

“This will help ease pressures on our trade and forex accounts as a result of global commodities price surge,” Azhar said as he shared the news.

PM Imran thanks Saudi crown prince

Meanwhile, PM Imran Khan has thanked Saudi Crown Prince Mohammad Bin Salman for supporting Pakistan with $3 billion as a deposit in the SBP and extending the $1.2 billion oil facility on deferred payment.

In a tweet Wednesday, he said Saudi Arabia has supported Pakistan in difficult times including now when the world confronts rising commodity prices.

Back in May, Federal Minister for Information Fawad Chaudhry had said Saudi Arabia had agreed, in principle, to revive the facility of oil supply to Pakistan on deferred payments.

Finance Minister Shaukat Tarin had repeated earlier this month that Saudi Arabia had agreed to provide oil on deferred payment to Pakistan.

The prime minister, on his visit to the kingdom earlier this year, had made a request to the kingdom’s authorities to resume the supply of oil to Pakistan on deferred payment for an extended period. It is unclear whether the same request was revived during the prime minister’s visit to the kingdom over the last weekend.

Prime Minister Imran Khan had on Monday met Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud on the sidelines of the Middle East Green Initiative (MGI) Summit in Riyadh, which he was invited to attend at the crown prince’s invitation. 

Earlier, Saudi Arabia had provided a $6 billion financial package, including $3 billion deposits into the State Bank of Pakistan and the remaining $3 billion for oil facility on deferred payment on an annual basis.

The previous oil facility from KSA was signed for three years during the visit of Saudi Crown Prince Mohammad Bin Salman to Pakistan. This facility was made operational from July 2019 with the understanding that the first-year bill would be paid on monthly basis and then second-year oil would be obtained on deferred payment.

The facility was agreed upon for three years with the possibility of rollover of second and then the third year. Both sides had agreed that this facility would be provided through the IDB’s Islamic Trade Finance Facility (ITFC). It is not known how much Pakistan had availed in its first year, and the facility was later suspended.

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