ISLAMABAD: Pakistan has received $2 billion in financial support from Saudi Arabia, Finance Minister Ishaq Dar said on Tuesday, a day before the International Monetary Fund’s board is expected to give final approval for a much-needed $3bn bailout.

Saudi Arabia has deposited the funds with the State Bank of Pakistan (SBP), Mr Dar said, boosting foreign exchange reserves, which stood at around $9.7 billion last Friday, according to the state-run Associated Press of Pakistan.

“I thank Saudi Arabia on behalf of the prime minister and the army chief,” the finance minister said in a recorded video statement, terming it a “great gesture” from the longtime ally.

Riyadh had pledged the funds in April, but had held off depositing the money with the SBP until it was sure that the IMF bailout would be forthcoming.

Assistance comes a day before IMF board convenes to give final approval to $3bn standby arrangement

The minister said that some more good developments would follow and lead the economy towards growth, adding that the economy of the country has already stabilised through the efforts of the incumbent government.

Also on Tuesday, Prime Minister Shehbaz Sharif extended his deep gratitude to the leadership and people of Saudi Arabia for the $2bn deposit with the State Bank of Pakistan.

“I would like to especially thank my brother Saudi Crown Prince and Prime Minister His Royal Highness Mohammed bin Salman for ensuring this financial support to Pakistan,” he wrote on Twitter.

“It reflects the growing confidence of our brotherly countries and the international community in Pakistan’s economic turnaround,” PM Shehbaz said.

Separately, talking to Saudi Ambassador Nawaf bin Saeed Ahmad Al-Malkiy, who called on the premier, PM Shehbaz thanked Riyadh for its generous and unwavering support for Pakistan, which, he said, was particularly instrumental in securing the deal with the IMF.

The PM also apprised the envoy about the formation of Special Investment Facilita­tion Council (SFIC) to facilitate and fast-track potential investments from the Gulf Cooperation Council (GCC) member states, including the Kingdom of Saudi Arabia.

He emphasised that Pakistan-Saudi cooperation in key areas, including IT, energy, infrastructure and labour must be fast-tracked and augmented.

Ambassador Nawaf, while expressing satisfaction on the current trajectory of bilateral relations between the two brotherly countries, noted that Pakistan and Saudi Arabia were bound in a fraternal relationship marked by mutual trust and understanding, close cooperation, and an abiding tradition of supporting each other through thick and thin.

The prime minister reiterated that Pakistan eagerly looked forward to the visit of the crown prince and prime minister to Pakistan at his earliest convenience.

Teetering on the cusp of a sovereign debt default, Pakis­tan secured the $3bn IMF bailout on the last day of June, though it still needs approval from the IMF board, which is meeting on Wednesday.

Under the nine-month arrangement, Pakistan will receive about $1.1bn upfront and the IMF will stagger disbursements of the rest.

Credit rating agency Fitch on Monday upgraded Pakis­tan’s sovereign rating to CCC from CCC-, with the bailout bringing some relief to investors in the country’s stocks and bonds.

Published in Dawn, July 12th, 2023