Saudi Arabia mulls increasing Pakistan deposit to $5 billion

• Sigh of relief as Saudi Arabia announces support.
• Riyadh vows to help Islamabad steer economy out of crisis.
• Develoment comes after Gen Munir's meeting with Mohammad Bin Salman.

RIYADH: Islamabad's efforts to shore up the country's forex reserves with the help of Saudi Arabia —amid a worsening currency crisis— have started paying off as Riyadh is considering 'beefing up' its deposit in the State Bank of Pakistan (SBP) from $3 billion to $5 billion.

According to Saudi media, Crown Prince Mohammad Bin Salman Tuesday directed his financial officials to study increasing the Pakistan deposit by $2 billion. 

The development comes a day after the Saudi crown prince's meeting with Chief of Army Staff General Asim Munir, who is on his first overseas official visit to the kingdom.

Last month, the Saudi Fund for Development (SFD) extended its term for the $3 billion deposit in the State Bank of Pakistan which was set to mature on December 5.

The SBP had signed an agreement with the SFD in November 2022 to receive $3bn, to be placed in the central bank’s account with an aim to improve its foreign exchange reserves.

According to a Saudi Press Agency (SPA) report today, Crown Prince Mohammad Bin Salman has directed the SDF to study increasing the amount of the deposit which has previously been extended on December 2, 2022, to hit a $5 billion ceiling, confirming the kingdom's position supportive to Pakistan’s economy and its people.

“This came within the framework of the existing communication between HRH the Crown Prince and Muhammad Shehbaz Sharif, Prime Minister of Pakistan,” the SPA added.

The state news agency added that the Saudi leader has also directed to study augmenting Riyadh's investments in Pakistan which have previously been announced on August 25, 2022, to reach $10 billion.

Pakistan is facing a currency crisis due to dwindling forex reserves which have slumped to $4.5 billion — enough for three weeks of imports.

On the other hand, Islamabad is making hectic efforts to revive the International Monetary Fund’s (IMF) loan programme stalled for months.

A Pakistani delegation held a meeting with the IMF officials in Geneva on Monday on the sidelines of the donors’ conference and reiterated its commitment to completing the programme.

Finance Minister Muhammad Ishaq Dar and IMF officials "discussed challenges to regional economies in the wake of climate change," according to a Finance Ministry statement following the meeting's conclusion.

"(The) finance minister reiterated the commitment to complete the Fund programme," it added.

The lender is yet to approve the release of $1.1 billion originally due to be disbursed in November last year, leaving Pakistan with only enough foreign exchange reserves to cover one month's imports.