Saudi Arabia Deposits $2 Billion in Pakistan’s Central Bank to Shore Up Reserves

Saudi Arabia deposited $2 billion in Pakistan’s central bank on Tuesday, a much-needed financial boost ahead of a critical meeting of the International Monetary Fund (IMF) on the new bailout package for the cash-strapped South Asian country.

The infusion of cash is not a loan, but rather a deposit that will shore up Pakistan’s foreign exchange reserves and remain with the central bank for at least a year. The deposit comes as Pakistan’s foreign exchange reserves have been declining, dropping to $9.6 billion last week — barely enough to pay import bills for a month.

The development comes on the eve of the meeting of the IMF’s executive board, which is expected to approve a new $3 billion loan to Pakistan to help the country overcome an economic crisis.

Finance Minister Ishaq Dar said that the Saudi deposit will help to improve Pakistan’s economic outlook and that the country is “committed to making all necessary efforts to improve Pakistan’s economy.”

Prime Minister Shehbaz Sharif also expressed his gratitude to Saudi Arabia for the deposit, saying that it “reflects the kingdom’s growing confidence in Pakistan’s economic turnaround.”

The IMF bailout package is seen as essential for Pakistan to avoid a default on its debt. The country’s economy has been struggling in recent years, due to a number of factors, including the COVID-19 pandemic, the war in Ukraine, and political instability.

The IMF bailout package is expected to include a number of conditions, including fiscal reforms and economic austerity measures. However, the deposit from Saudi Arabia will provide Pakistan with some breathing room as it negotiates with the IMF.

The deposit from Saudi Arabia is a welcome development for Pakistan, but it is not a long-term solution to the country’s economic problems. The IMF bailout package will provide some relief, but it will be important to implement reforms and adopt sound economic policies in order to put the country on a sustainable footing.

In January, the Kingdom announced it may raise its investments in the Pakistani economy, which suffers from a lack of liquidity to $ 10 billion, in addition to raising the ceiling of its deposits in the Central Bank of Pakistan to $ 5 billion.

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