Pakistan Gets $4 Billion Help To Uplift Economy From Saudi Arabia and UAE
Saudi Arabia funds a $1 billion deal for oil delivery, and the UAE approves $3 billion in aid. The economy is slumping, and bank reserves are declining.
The United Arab Emirates and Saudi Arabia on Thursday provided Pakistan with a $4 billion lifeline to help it overcome the immediate issue of a sovereign default amidst fast-depleting foreign exchange reserves, significant flood damage, and a general slump in the economy.
According to two different official declarations, the UAE promised to roll over $2 billion in debt due in the next two months and added an additional $1 billion in support during Prime Minister Shehbaz Sharif’s continuing tour to the emirates.
Separately, in Islamabad, the Saudi Fund for Development (SFD) reached an agreement to finance $1 billion in oil imports with delayed payment.
On Thursday, the central bank’s reserves fell to a critical $4.34 billion level, the biggest drop since February 2014 and just enough to cover just under one month’s worth of restricted imports.
Prior $2 billion loans from the UAE were slated to mature in February and March. With the rollover, the government now has the chance to restart the IMF programme over the coming days, gradually rebuild foreign exchange reserves, and lift a strict import quota that has hampered the manufacturing industry and caused a scarcity of necessities.
In order to finance oil derivatives worth $1 billion for Pakistan, an agreement on Saudi support was inked in Islamabad by SFD Chief Executive Officer Sultan Abdulrahman Al-Marshad and Government of Economic Affairs Secretary Dr Kazim Niaz, according to the ministry.
According to the statement, the agreement was a formalisation of the Saudi Crown Prince Mohammed bin Salman and King Salman bin Abdulaziz’s orders to support Pakistan through trying times.
Earlier this week, Saudi Arabia announced that it was thinking about increasing its stakes in Pakistan to $10 billion and upping its deposit with the country’s central bank to $5 billion from $3 billion. The particulars still need to be sorted out.
The comprehensive agreement agreed on Thursday is a resumption of Saudi Arabia’s assistance to Pakistan in creating a sustainable economy and is intended to support Pakistan’s economy, sector growth, and managing economic obstacles, according to the ministry.
The SFD signed deals to finance oil contracts in 2019 and 2021 with a value of $4.44 billion, but these agreements could not be completely utilised, according to the report.
The agreement, according to the statement, marks the latest steps taken by the government of Saudi Arabia through the SFD and the Pakistani authorities to enhance development in the country.” The SFD, it added, had endorsed more than 40 programmes and projects in various development sectors totalling roughly $1.4 billion since its founding to fund Pakistan’s power, water, transportation, and construction projects.
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