Saudi Arabia Transfers $2b To Pakistan

Saudi Arabia Transfers $2b To Pakistan
After Pakistan and the International Monetary Fund (IMF) came to an agreement over an external financing arrangement, Saudi Arabia on Tuesday transferred $2 billion into Pakistan's accounts.

The transfer was confirmed by Federal Finance Minister Ishaq Dar and the State Bank of Pakistan (SBP).

In a tweet and subsequent news conference, Dar said that the deposit had been received in the national treasury account maintained by SBP for external funds.

"Our brother country Saudi Arabia had made an announcement recently that it would deposit its $2 billion with the State Bank of Pakistan. They have placed the deposits, and the amount has been credited to SBP," Dar said.

As a result, it has boosted Pakistan's forex reserves to around $11.7 billion. A more accurate picture of the reserves will be available in the weekly reserves bulletin put out by the SBP, with the next bulletin due on July 14.

READ MORE: Fitch Ratings Upgrade: Pakistan’s Economic Recovery On The Horizon?

Curiously, Dar extended thanks to the leadership of Saudi Arabia on behalf of Prime Minister Shehbaz Sharif, Chief of Army Staff General Asim Munir and the people of Pakistan, noting that Saudi Arabia has been playing the role of a brother to Pakistan and stands with it at every occasion.

Moreover, in his tweet, Dar seemed to link to an unofficial fan account of Gen Munir. The army chief does not have an official presence on social media.

External financing plan

Meanwhile, the IMF has agreed to a plan presented by the finance ministry to arrange for around $2.8 billion.

Sources said that the IMF was concerned over the gap in financing for which the finance ministry presented a plan which has now been accepted.

READ MORE: IMF’s Dialogue: Political Interference Or Simple Due Diligence?

The plan involves securing around $2 billion from Saudi Arabia. Around $500 million each will be secured from the Asian Development Bank and the World Bank.

Sources suggested that this was the last hurdle prior to the meeting of the IMF board scheduled for later this week which is expected to now endorse the $3 billion nine-month standby agreement.

Moreover, on Monday, global financial ratings firm Fitch Ratings upgraded Pakistan's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from '-CCC, indicating a positive development towards the betterment of the country's economy.