Saudi Arabia commits $3bn new deposit to Pakistan as Islamabad faces $3.5bn repayment to UAE
&imwidth=600&imheight=450&format=webp&quality=medium "Saudi Arabia commits $3bn new deposit to Pakistan as Islamabad faces $3.5bn repayment to UAE")
Pakistan's Finance Minister Muhammad Aurangzeb with Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan Photograph: (X/Financegovpk)
After talks involving Pakistan's Finance Minister Muhammad Aurangzeb with Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan, Riyadh has agreed to a fresh $3bn deposit and easier terms on existing funds.
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Pakistan Foreign Ministry on Wednesday (Apr 15) announced that Saudi Arabia has agreed to $3 billion in fresh deposits, with disbursement expected in the coming week. The nation has also agreed to restructure an existing $5 billion facility on more favourable terms, announced Pakistan's Finance Minister Muhammad Aurangzeb. The announcement came on the sidelines of the IMF-World Bank Spring Meetings in Washington, following talks between Aurangzeb and Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan. The two had met previously in Islamabad last Friday, though Pakistani authorities deliberately held back from making any public statement until both sides had reached a formal agreement. This comes as Islamabad navigates a demanding external repayment schedule.
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Saudi commits to $3 billion in additional deposits to Pakistan
"Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, has informed that the Kingdom of Saudi Arabia has committed USD 3 billion in additional deposits, with disbursement expected in the coming week," announced Pakistan's Ministry of Finance on X.
"The existing USD 5 billion Saudi deposit would no longer remain subject to the earlier annual rollover arrangement and would instead be extended for a longer period," added the post.
The more consequential of the two developments may be the restructuring of the existing $5 billion deposit. Previously, that facility was subject to annual rollovers, a cycle that created recurring uncertainty for Pakistan's foreign exchange position and was entangled with IMF conditionalities. Under the new arrangement, the deposit will be extended for a longer, unspecified term, removing that source of annual market anxiety.
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Pakistan's financial woes
Pakistan faces a $3.5 billion repayment to the UAE by the end of April. Reports indicate the UAE had been pressing for immediate settlement, while Saudi Arabia and Qatar have together assembled a combined $5 billion buffer to absorb the impact on Pakistan's reserves, which currently stand at roughly $16.4 billion. The government has set a target of reaching approximately $18 billion in reserves, equivalent to around 3.3 months of import cover, by the end of the fiscal year.
Aurangzeb also noted that Pakistan had successfully repaid a $1.4 billion Eurobond last week, describing it as a "non-event".
