Saudi Arabia is providing $4.2 billion in financial assistance to Pakistan to shore up its foreign reserves and help the South Asian country recover from the effects of the coronavirus pandemic.
The Saudi Fund for Development will deposit $3bn into the State Bank of Pakistan as part of the support package extended by the kingdom, Saudi Press Agency reported on Wednesday. It will also finance oil derivatives' trade worth $1.2bn during the year.
“The royal directives confirm the Kingdom of Saudi Arabia's continuing stance in supporting the economy of … Pakistan,” a statement said.
Pakistan’s economy contracted 0.5 per cent last year due to the pandemic, the International Monetary Fund said, but is expected to grow 3.9 per cent this year.
The government is holding talks with the IMF for the resumption of a $6bn loan package approved by the Washington-based lender in 2019 to help the country to overcome its financial difficulties, Pakistan daily Dawn reported this month. The fund put the programme on hold in January 2020 after the government did not agree to increase electricity prices and impose additional taxes, the newspaper said.
Pakistan Prime Minister Imran Khan, who visited the kingdom this week and met Crown Prince Mohammed bin Salman on the sidelines of the Middle East Green Initiative summit in Riyadh, welcomed the financial backing.
“I want to thank HRH Prince Mohammad bin Salman for supporting Pak with $3bn as deposit in Pak's central bank & financing refined petroleum product with $1.2bn,” Mr Khan tweeted after the Saudi Arabian government announcement.
He said Saudi Arabia had always supported Pakistan in difficult times and it continues to support the country as commodity prices soar globally.
Saudi Arabia has previously given financial assistance to Pakistan, including $3bn in foreign currency support in 2018 and a loan worth up to $3bn in deferred payments for oil imports.
Pakistani rupee bounced back against the US dollar after the announcement on Wednesday.