Pakistan’s extremely low foreign exchange reserves were boosted on Tuesday with $2 billion in financial support from Saudi Arabia, ahead of a crucial IMF meeting this month to approve a new deal. The economy has been hit by a balance of payments crisis as it struggles to repay crippling foreign debt, while months of political chaos have scared away foreign investment.
Inflation is at a peak, the rupee has hit a record low against the dollar and the country is struggling to afford imports, leading to a sharp decline in industrial output. Pakistan’s Finance Minister Ishaq Dar said in a statement, “Saudi Arabia recently announced that it will deposit an additional $2 billion in the account of the State Bank of Pakistan – which has been deposited in the account of the State Bank of Pakistan. ” Television press conference.
This brings the state’s foreign reserves to a total of $6.5 billion, nearly 50 per cent higher than last week’s account balance. Faisal Shaji, a research analyst at Standard Capital Securities, told AFP that the deposit would stabilize Pakistan’s foreign exchange reserves and improve its credit rating in international markets. “This is also a big and positive development in the direction of the IMF program. As a result, Pakistan’s currency will strengthen and it will have a better impact on the stock market.”
After months of negotiations, the IMF last week announced a new additional $3 billion deal for Pakistan, including securing further financial aid guarantees from allies, after the government met the final terms. The IMF’s executive board will consider approving the standby deal by mid-July.
Years of fiscal mismanagement have pushed Pakistan’s economy to its limits, exacerbated by the Covid pandemic, the global energy crisis and record floods that inundated a third of the country last year. Data released last week showed that Pakistan’s headline inflation eased for the first time in seven months in June, a boon for an embattled government that will face elections this year.