Pakistan Reader# 454, 8 December 2022
On 7 December, Finance Minister Ishaq Dar in a meeting with Saudi Arabia’s ambassador Nawaf bin Said Al-Malki requested the country to urgently provide USD three billion in cash after the foreign exchange reserves fell to a critically low level. He also thanked the ambassador for extending the term of a USD three billion deposit in the State Bank of Pakistan (SBP) by the Saudi Fund for Development (SFD). Additionally, during the meeting, they discussed the possibility to augment the current USD 1.3 billion Saudi oil facility on deferred payments and the USD one billion Saudi investment in Pakistan.
Another loan from Saudi Arabia
FM Dar’s request for the cash bailout is the same amount of money rollover of the previous debt
Previously, on 2 December, the SBP stated that Saudi Arabia had decided to extend the term for the USD three billion dollars deposit in the central bank. According to the SBP, the Saudi Fund for Development (SFD) decided to extend the term of the deposit for one year, however, bankers claimed that the government was willing to get a three-year extension, but due to the instability political situation in Pakistan, they refrained from getting it extended further. Further, the SBP stated that the extension would help the country meet external sector challenges and achieve sustainable economic growth.
Foreign exchange reserves fall below the USD seven billion level
Pakistan’s forex reserves plummeted to a historic low of USD 7.5 billion for the week ending on 25 November, the lowest since January 2019. The current reserves stand at around USD 6.7 billion, when compared to USD 6.6 billion on 18 January 2019. According to The Express Tribune, this amount is not sufficient to service the USD 8.8 billion principal and interest payments during the January-March period of the current fiscal year. (Muhammad Omer Hayat, “Shares plunge 537 points over uncertainty on IMF review, dwindling forex reserves,” Dawn, 8 December 2022; Shahid Iqb, “Pakistan gets much-needed relief from Saudi Arabia,” Dawn, 8 December 2022; Shahbaz Rana, “Pakistan seeks emergency $3b Saudi cash injection,” Dawn, 8 December 2022)