Saudi Arabia, Pakistan sign agreement for $3bn deposit

• Per a joint statement, the deposit amount under the agreement shall become part of SBP’s foreign exchange reserves.
• The deposit will help contribute towards resolving the "adverse effects of the COVID-19 pandemic."
• "Agreement will further augment economic ties between the two brotherly countries," it said.

KARACHI: In an expected development, the State Bank of Pakistan (SBP) and Saudi Fund for Development (SFD) on Monday signed a deposit agreement for the much-awaited funds worth $3 billion.

According to a joint statement, under this deposit agreement, SFD shall park $3 billion in the SBP. “The deposit amount under the agreement shall become part of SBP’s foreign exchange reserves,” it said.

The central bank added that the deposit would help support Pakistan’s foreign currency reserves and “contribute towards resolving the adverse effects of the COVID-19 pandemic.”

The deposit agreement was signed by SFD Chief Executive Officer H E Sultan Bin AbdulRahman Al-Marshad and the SBP Governor Dr Reza Baqir at the State Bank of Pakistan in Karachi.

The joint statement noted that the deposit agreement reflects the strong and special relationship between the Kingdom of Saudi Arabia and Pakistan and “will further augment the economic ties between the two brotherly countries.”

It is pertinent to mention here that on October 27, the Saudi Fund for Development agreed to deposit $3 billion in the SBP to help support its foreign reserves.

The fund had stated that an official directive was issued to supply $1.2 billion to finance Pakistan’s oil products trade during the year.

Per details, Saudi Arabia will charge around 3.2 to 3.5% markup on annual basis for this deposit amount.

According to the central bank, Pakistan’s total liquid foreign reserves stood at $22.773 billion on November 19, 2021. The break-up of the figures shows that foreign reserves held by the SBP were standing at $16.254 billion and net foreign reserves held by commercial banks were standing at $6.519 billion.

During the week ended on November 19, 2021, the SBP's reserves decreased by $691 million to $16.254 billion, mainly due to external debt repayments.