In IMF good books, Pakistan gets $2bn from Saudi Arabia

ISLAMABAD: The Kingdom of Saudi Arabia (KSA) has provided an additional $2 billion in deposits to help the State Bank of Pakistan (SBP) for jacking up its foreign exchange reserves just ahead of the International Monetary Fund (IMF)’s Executive Board meeting.

Pakistani authorities insisted that the IMF board would hold a meeting in Washington, DC, on Wednesday (today) for considering the approval of $3 billion Standby Arrangement (SBA) programme. A top Pakistani official Tuesday night confirmed that IMF Executive Board was taking up Pakistan’s request for the $3 billion approval of SBA in its today’s meeting. The official also said that the UAE’s additional deposit of $1 billion was also expected within this week. When The News sought comments late Tuesday night regarding the meeting, IMF chief in Pakistan Esther Perez Ruiz said July 12 is confirmed. If the IMF grants its approval in its board meeting, then Pakistan will receive the first tranche of $1.1 billion within the next few days. With an additional $2 billion from the KSA, the total package will be increased to $6.2 billion -- $5 billion deposits and an ongoing oil facility of $1.2

billion on deferred payments. During the last two fiscal years, Saudi Arabia provided deposits and oil facilities to the tune of $7.4 billion to help Pakistan during its difficult economic situation.

This scribe also sent out questions to the IMF’s headquarters in Washington for seeking an official version but got no response till the filing of this report. The sources said that the IMF has estimated that Pakistan was facing a financing gap of $6 billion, which would be bridged by seeking loans from multilateral and bilateral creditors as well as commercial financing. It included $2 billion from the KSA, $1 billion from the UAE, $1 billion from Islamic Development Bank, $450 million from World Bank’s RISE-II programme and $250 million from the Asian Infrastructure Investment Bank. The remaining amount will be obtained from commercial loans in the current fiscal year.

Earlier, Minister for Finance Ishaq Dar announced in his televised address that the Kingdom of Saudi Arabia had placed $2 billion in additional deposits in the SBP, which would help jack up the country’s foreign exchange reserves. The overall foreign exchange reserves, which stood at $9.6 billion, would be increased to $11.6 or $11.7 billion, he added. “I am thankful to Saudi Arabia’s leadership, including King Salman and Crown Prince Mohammed Ben Salman, on behalf of the prime minister, Chief of Army Staff and myself as they stood with Pakistan at every difficult moment,” Dar said. He said that Saudi Arabia’s fulfilled their commitment which they had announced a few weeks ago. “In days to come, there will be positive developments,” he said and added that the economic stability has been achieved and now moved towards a growth trajectory.

Multilateral and bilateral funds were a major obstacle in the way of Pakistan’s deal with the IMF — which remained stalled for more than nine months and expired. The standby agreement has now provided the nation with a breathing space, avoiding a sovereign default, and helped the government streamline fiscal policies. With sky-high inflation and foreign exchange reserves barely enough for a month of controlled imports, analysts say Pakistan’s economic crisis could have spiralled into a debt default in the absence of the IMF bailout. Prime Minister Shehbaz Sharif, meanwhile, also expressed his deep gratitude to the Kingdom of Saudi Arabia for depositing $2 billion with the SBP which, he said, will strengthen Pakistan’s foreign exchange reserves. “On behalf of the people of Pakistan, I would like to extend my deep gratitude to the leadership and brotherly people of the Kingdom of Saudi Arabia for the US$2 billion deposit with the State Bank of Pakistan,” the prime minister in a tweet said. He especially thanked Saudi Crown Prince and Prime Minister Mohammed Bin Salman for ensuring financial support. Shehbaz said the support reflects the growing confidence of our brotherly countries and the international community in Pakistan’s economic turnaround. He said the government remains committed to making all necessary efforts to improve Pakistan’s economy. The prime minister also thanked Ishaq Dar and COAS General Asim Munir for the valuable efforts they made in this regard. In a related development, the Ambassador of Saudi Arabia to Pakistan Nawaf bin Saeed Ahmad Al-Malkiy had an important meeting with Prime Minister Shehbaz Sharif here at the PM House. They discussed cooperation between the two brotherly countries in various fields. The prime minister hailed the Saudi leadership for its generous and unwavering support for Pakistan which, he said, was particularly instrumental in securing the deal with the IMF. He asked the Saudi envoy to convey his special gratitude to Crown Prince MBS for the deposit of $2 billion with the State Bank of Pakistan. He apprised Ambassador Al-Malkiy about the formation of the Special Investment Facilitation Council to facilitate and fast-track potential investments from the GCC member states, including the Kingdom of Saudi Arabia. He emphasised that mutually rewarding Pakistan-Saudi cooperation in key areas, including IT, energy, infrastructure and labour must be fast-tracked and augmented. Ambassador Nawaf, while expressing satisfaction on the current trajectory of bilateral relations between the two brotherly countries, noted that Pakistan and Saudi Arabia were bound in a fraternal relationship marked by mutual trust and understanding, close cooperation and an abiding tradition of supporting each other through thick and thin. The prime minister reiterated that Pakistan eagerly looked forward to the visit of Prince Mohammed Bin Salman at his earliest convenience. Separately, addressing a ceremony in Peshawar, Shehbaz said that the deal with the International Monetary Fund loan was not taken with ease of mind, but under compulsion. “Loans are no solution. Pakistan has all natural resources including precious lands for agriculture, and mineral wealth and only strong will is required to take it out of existing challenges,” he added. He said that corruption had ruined the country. “When Pakistani officials or I visit other countries, their dignitaries receive us. When I see them their facial expressions tell that we are there to beg money,” he added, according to Geo News. The prime minister questioned that as a nation for how long they would continue to depend upon foreign loans. “It is the pricking question,” he added. He said a neighbouring country of Pakistan in the year 1991 sought the last IMF programme and then did not require any other financial programme. The prime minister underscored the need they had to streamline their affairs by learning lessons from the past and “like an active nation have to move ahead”. He said that the recurrence of the May 9 vandalism incident must never be allowed to happen and should be countered through the promotion of education. Meanwhile, the Pakistani rupee appreciated Rs1.23 against the US dollar in the interbank market on Tuesday, closing at Rs278.57, up from Rs279.80 on Monday. The dollar shed one rupee in the open market, closing at Rs282. The Saudi deposit news also had a positive impact on the stock market. A bullish Pakistan Stock Exchange 100 index crossed 45,000 points after 14 months. After gaining 550 points, the index reached the 45,155 mark.