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Saudi Arabia deposits USD2B in Pakistan’s central bank ahead of key IMF meeting

ISLAMABAD (AP) – Saudi Arabia has deposited USD2 billion into Pakistan’s central bank, the government said yesterday, 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.

In a video statement, Pakistani Finance Minister Ishaq Dar said the kingdom was making good on its promise to bolster Pakistan’s foreign exchange reserves. The infusion is not a loan as such but will shore up the reserves and remain with Pakistan’s central bank for at least a year.

The development comes on the eve of the meeting of the IMF’s executive board which is expected to approve a new and much-needed USD3 billion loan to Pakistan to help the country overcome an economic crisis.

Dar said that with the Saudi deposit, Pakistan’s foreign exchange reserves which dropped to USD9.6 billion last week – barely enough to pay import bills for a month – have gone up to USD11.6 billion.

“We thank the Saudi leadership on behalf of the government and people of Pakistan,” he said.

Women and children wait for free food at a distribution point in Lahore, Pakistan. PHOTO: AP

He assured the nation that Pakistan would soon return to the path of growth.

Following the announcement, Prime Minister Shehbaz Sharif tweeted his “deep gratitude to the leadership and brotherly people of the Kingdom of Saudi Arabia” and said the deposit reflects the kingdom’s growing confidence in Pakistan’s economic turnaround.

“We remain committed to making all necessary efforts to improve Pakistan’s economy,” Sharif said.

The IMF late in June agreed to provide USD3 billion to Pakistan in badly needed relief to bail out the impoverished country’s ailing economy – a nine-month agreement that the IMF’s executive board is to approve today at a meeting in the United States.

Pakistan also hopes the board will approve the release of a crucial USD1.1 billion from the bailout.