PM showers praise on Crown Prince Salman, COAS for $2 billion Saudi deposit
Shehbaz Sharif says Saudi will help build foreign exchange reserves: Ishaq Dar hopes improvement in economic indicators
By News Desk
July 11, 2023 11:58 AM
Prime Minister Shehbaz Sharif has expressed his gratitude to the leadership of the Kingdom of Saudi Arabia for the US$2 billion deposit with the State Bank of Pakistan, saying it reflects the growing confidence of our brotherly countries and the international community in Pakistan’s economic turnaround, reported 24NewsHD TV channel.
The prime minister also appreciated and thanked Finance Minister Senator Ishaq Dar and COAS General Syed Asim Munir for the valuable efforts they have made in securing the Saudi loan.
Taking to his Twitter handle on Tuesday, PM Shehbaz said: “On behalf of the people of Pakistan, I would like to extend my deep gratitude to the leadership and brotherly people of the Kingdom of Saudi Arabia for the US$2 billion deposit with the State Bank of Pakistan. I would like to especially thank my brother Saudi Crown Prince & Prime Minister His Royal Highness Mohammed bin Salman for ensuring this financial support to Pakistan. This deposit will strengthen Pakistan’s foreign exchange reserves. It reflects the growing confidence of our brotherly countries and the international community in Pakistan’s economic turnaround. We remain committed to making all necessary efforts to improve Pakistan’s economy. I would also like to appreciate and thank Finance Minister Senator Ishaq Dar and COAS General Syed Asim Munir for the valuable efforts they have made in this regard.”
Earlier, Finance Minister Ishaq Dar broke the news that Saudi Arabia deposited $2 billion with the State Bank today.
He said that he was grateful to the Saudi government and also extended gratitude to the brotherly Muslim country on behalf of Prime Minister Shehbaz Sharif and Chief of Army Staff General Asim Munir. He expressed confidence in country’s economic condition and hoped that further improvement would come in future.
In a tweet posted today, Dar wrote: “State Bank of Pakistan (SBP) has received deposit of $2 billion from the Kingdom of Saudi Arabia. This inflow has increased the forex reserves held by SBP and will accordingly be reflected in the forex reserves for the week ending 14 July 2023.
“On behalf of PM Shehbaz Sharif and COAS Gen Asim Munir, myself and the People of Pakistan, I extend our heartfelt thanks to the leadership of Kingdom of Saudi Arabia for their great gesture and support by placing said deposit of $2 billion with State Bank of Pakistan!”
Yesterday, Dar tweeted: “Global Rating Agency “Fitch” upgrades Pakistan’s Long Term Foreign-Currency rating to CCC from IDR (Issuer Default Rating).
Another positive news towards current economic revival journey, AlhamdoLilah.”
Fitch Ratings on Monday upgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC’ from ‘CCC-’ reflecting reduced external financing risks with improved external liquidity and funding conditions following recent staff-level agreement (SLA) with the IMF on a nine-month Stand-by Arrangement (SBA) in June.
In a statement, Fitch said the government had now taken all those steps that had held up three quarterly reviews of the previous $6.5bn Extended Fund Facility (EFF), which expired on June 30. These included measures to address shortfalls in government revenue collection, energy subsidies, and policies inconsistent with a market-determined exchange rate, including import financing restrictions.
For the release of its bailout package, the IMF had asked Pakistan to provide it with an external financing plan. Then the Ministry of Finance sent the $8 billion financing plan from the friendly countries to the IMF as per its requirement.
According to the plan, the government is expected to get $3.5 billion from China, a $2 billion loan from Saudi Arabia, $1 billion from the UAE, and $500 million each from the Asian Development Bank and the World Bank.
Besides this, the plan also included $350 million pledged during the Geneva Conference.
It brings state foreign reserves to a total of $6.5 billion, an almost 50 percent increase compared to last week's account balance.
Faisal Shaji, a research analyst with Standard Capital Securities, told AFP that the deposit will stabilise Pakistan's foreign exchange reserves and will improve its credit rating in the international market.
"This is also a big and positive development towards the IMF program. As a result, Pakistan's currency will be strengthened and it will have a better impact on the stock market."
After months of prolonged negotiations, the IMF last week announced a new standby deal worth $3 billion for Pakistan after the government met the final conditions, including securing guarantees of further financial support from friendly nations.
The standby deal will be considered for approval by the IMF's executive board by mid-July.
Years of financial mismanagement have pushed Pakistan's economy to the limit, exacerbated by the Covid pandemic, a global energy crisis and record floods that submerged a third of the country last year.
Pakistan's headline inflation eased for the first time in seven months in June, figures released last week showed, a bright spot for a beleaguered government that must call an election this year.