Saudi Arabia extended the term of a $3 billion deposit with Pakistan for an additional year, according to what the Central Bank of Pakistan revealed.
The Central Bank of Pakistan said that the Saudi Fund for Development, on behalf of the Kingdom of Saudi Arabia, extended the term of a $3 billion deposit due on December 5, 2023 for another year.
The Central Bank explained, in its statement issued today, that extending the term of the deposit comes as “a continuation of the support provided by Saudi Arabia to the Republic of Pakistan, which will help preserve the country’s foreign currency reserves and contribute to the country’s economic growth.”
It should be noted that this is the second time that the term of the Saudi Fund for Development deposit has been extended, as the deposit agreement was signed in November 2021.
Pakistan is set to hold national elections in February, after the South Asian country avoided a default by securing a loan agreement with the International Monetary Fund in July. It is expected that extending the deposit will give the Central Bank some breathing space after raising interest rates over the past two years, especially in light of the scarcity of foreign liquidity in the country.
The central bank said in its report issued last month that the economic conditions and scarcity of foreign flows “are putting pressure on the external account, which has led to a decrease in the central bank’s foreign exchange reserves.”
According to the latest data available on the Central Bank of Pakistan website, foreign reserves held by the Central Bank fell to $7.18 billion in the week ending November 17, compared to $7.432 billion at the end of October.
It should be noted that the foreign reserve at the Central Bank had reached its lowest levels at $3.1 billion last January.
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