Finance Minister Ishaq Dar on Tuesday said that Pakistan has received $2 billion from the Kingdom of Saudi Arabia (KSA) days after the country secured another lifeline from International Monetary Fund (IMF).
“On Friday, our reserves had closed in at less than $10 billion, standing at roughly $9.67 billion so you can now imagine them close to $11.67 billion,” he said.
“You can expect this $2 billion to reflect starting this Friday in the State Bank reserves,” the minister added.
He extended his gratitude towards KSA, particularly King Salman and Crown Prince Muhammad bin Salman on behalf of Prime Minister Shehbaz Sharif and Chief of Army Staff (COAS) General Syed Asim Munir.
“We are grateful to them for having always stood by Pakistan like a true brother,” he said stressing that “as per their announcement, they [KSA] have physically submitted the deposit with the SBP”.
The finance minister also said that he expected “further positive developments” in the coming few days that would help to stabilise the country’s economy.
Notably, on Friday the country’s foreign exchange reserves had shown improvement for the second consecutive week, when they reached $4.4 billion.
The finance minister, however, insists that the total foreign exchange reserves stand much higher and habitually consolidates the amount with foreign exchange reserves held by the commercial banks.
Nonetheless, the financial support from KSA is expected to help shore up the foreign exchange reserves that had dipped low enough to barely cover a month of imports.
With the executive board of the International Monetary Fund (IMF) on July 12 to endorse the staff-level agreement with Pakistan, the cash-strapped country is likely to receive $3 billion as part of the stand-by arrangement (SBA).
Although essentially a bridge loan, it offers much respite to Pakistan, which is battling an acute balance of payments crisis and falling foreign exchange reserves.
Meanwhile, the Pakistani currency has maintained its downward trend after workers’ remittances slumped 14% to $27 billion in the previous fiscal year ended June 30, 2023.
The availability of a more favourable rupee-dollar exchange rate in illegal markets diverted the flows away from legal channels, impacting the country’s foreign exchange reserves, which currently stand critically low at $4.4 billion. The government has responded by implementing import controls to ensure the timely repayment of maturing foreign debt.
