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Cash-strapped Pakistan will get $8 billion in monetary help from Saudi Arabia

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Pakistan has confronted rising financial challenges, with excessive inflation, sliding foreign exchange reserves, a widening present account deficit and a depreciating foreign money

Pakistan has confronted rising financial challenges, with excessive inflation, sliding foreign exchange reserves, a widening present account deficit and a depreciating foreign money

Saudi Arabia has agreed to supply Pakistan with a “sizeable package” of round $8 billion to assist the cash-starved nation bolster dwindling foreign exchange reserves and revive its ailing financial system, a media report stated on Sunday.

Pakistan has confronted rising financial challenges, with excessive inflation, sliding foreign exchange reserves, a widening present account deficit and a depreciating foreign money.

Pakistan secured the deal through the go to of Prime Minister Shehbaz Sharif to Saudi Arabia. The monetary package deal consists of doubling of the oil financing facility, extra cash both via deposits or Sukuks and rolling over of the prevailing $4.2 billion amenities, The News newspaper reported.

“However, technical details are being worked out and it will take a couple of weeks to get all documents ready,” the report stated, citing high official sources aware of the event.

Prime Minister Sharif and his official entourage have left Saudi Arabia however Minister for Finance Miftah Ismail continues to be within the Gulf nation to finalise the modalities of the monetary package deal.

“Just said goodbye to Prime Minister Shehbaz Sharif and other colleagues at Jeddah Airport, who are on their way to Islamabad after a brief stopover in Abu Dhabi to meet Crown Prince Muhammad Bin Zayed. I remain in SA to meet Saudi officials and start technical-level talks,” Mr. Ismail stated in a tweet.

Pakistan had proposed doubling the oil facility from $1.2 billion to $2.4 billion and Saudi Arabia agreed to it. It was additionally agreed that the prevailing deposits of $3 billion could be rolled over for an prolonged interval of as much as June 2023, in response to an official.

“Pakistan and Saudi Arabia discussed an additional package of over $2 billion either through deposits or Sukuk and it is likely that more money will be provided to Islamabad,” the report stated, including that the scale of the entire package deal will likely be decided when the extra cash is finalised.

Saudi Arabia supplied $3 billion deposits to the State Bank of Pakistan in December 2021 whereas the Saudi oil facility was operationalised from March 2022, offering Pakistan with $100 million to acquire oil.

The oil-rich Gulf nation had supplied a $7.5 billion package deal to Pakistan over the past tenure of the PML-N authorities (2013-18). Under the PTI-led regime headed by ex-Prime Minister Imran Khan, Saudi Arabia supplied a package deal of $4.2 billion, together with $3 billion deposits and a $1.2 billion oil facility for one 12 months and linked it with the IMF programme.

Saudi Arabia has supplied an enhanced monetary package deal to Pakistan when its financial system is in dire straits and the nation is dealing with a stability of fee disaster. The nation’s overseas change reserves have depleted by $6 billion within the final six to seven weeks and nosedived to $10.5 billion.

With the rising present account deficit at $13.2 billion within the first 9 months and urgent exterior mortgage compensation necessities, Pakistan requires monetary help of $9-12 billion until June 2022 to avert additional depletion of overseas foreign money reserves.

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