No Credit
Saudi Arabia is finalizing an agreement to extend the deposit period of $3 billion to Pakistan, the Gulf kingdom’s Finance Minister Mohammed al-Jadaan told Reuters on Tuesday.
“We are currently finalizing extending the $3 billion deposit to Pakistan,” he told the news agency on the sidelines of the World Economic Forum in Davos.
Saudi Arabia had deposited $3 billion with the State Bank of Pakistan last year to bolster the country’s foreign reserves. While the terms of the deposit were not made public, local media reported that it contained particularly harsh terms, including requiring Pakistan to continue with its bailout program from the International Monetary Fund or face its withdrawal.
According to Reuters, Jadaan did not offer further details. However, earlier this month, Islamabad and Riyadh had said in a joint statement that they would discuss the possibility of continuing the support, either through extending the term of the deposit “or through other options.” He said Pakistan was an important ally and the kingdom would stand behind the South Asian nation.
Pakistan is in the midst of an economic crisis, with foreign exchange reserves having declined to a point where they can only support two months of imports. The Pakistani rupee has also been in a tailspin against the U.S. dollar, raising import costs and debt repayments. Last week, the government announced a ban on the import of non-essential, luxury imports to reduce its import bill. Finance Minister Miftah Ismail has also left for Doha to continue negotiations with the IMF to revive a suspended bailout program to bolster the country’s economy.