SBP receives $1bn Saudi assistance

KARACHI: The State Bank of Pakistan (SBP) on Monday received the first tranche of $1 billion under the balance of payment support from Saudi Arabia.

According to a SBP spokesperson, the central bank has received $1bn dollar of the total promised $3bn Saudi assistance to boost Pakistan’s depleting foreign exchange reserves.

After the receipt of the amount, the country’s foreign exchange reserves have increased to more than $14 billion, said the spokesperson.

Following Prime Minister Imran Khan’s visit to the kingdom of Saudi Arabia last month, the government announced that Riyadh had agreed to give Pakistan $3 billion in foreign currency support for a year and a further loan worth up to $3 billion in deferred payments for oil imports to help stave off a current account crisis.

Earlier this month, Finance Minister Asad Umar said: “Pakistan’s immediate balance of payment crisis is over.”

Lately, credit rating agency Moody’s said in its “Global Emerging Markets: Outlook” report that successful negotiations for a new International Monetary Fund programme would reduce external financing risks for Pakistan,

The government is seeking all sources to avert the imminent balance of payment crisis, the report observed.

The central bank foreign exchange reserves had fallen to their lowest levels in four years reaching $7.5bn, which could not meet the bill of two months’ imports, the report said.

The rating agency report has kept the outlook for global emerging markets (EM) “broadly stable” but warns of risks from “higher rates, politics and trade tensions”.

The report highlights that “although the share of [Pakistan’s] foreign currency debt is relatively low at around 35pc of total government debt, declining foreign reserves because of a current account deficit of around four to five percent of GDP, raise repayment risks.”

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