On Tuesday, Finance Minister Ishaq Dar said that Pakistan had received $2 billion in financial support from Saudi Arabia, a day before the International Monetary Fund’s board is anticipated to approve a much-needed $3 billion bailout.
Dar said in a recorded video statement, terming it as a “great gesture” from the longtime ally, saying, ” I thank Saudi Arabia on behalf of the prime minister and army chief.”
Dar further added that Saudi Arabia deposited the funds with the central bank, boosting foreign exchange reserves when Pakistan had been left with hardly enough to cover a month of controlled imports.
Saudi Arabia committed the fund in April but held off depositing the money with the State Bank of Pakistan until the IMF bailout was sure to be imminent.
Moreover, Prime Minister Shehbaz Sharif said, ” It reflects the thriving confidence of our brotherly countries and the International community in Pakistan’s economic turnaround.”
Under the nine-month arrangement, Pakistan will receive around $1.1 billion upfront, and the IMF will stagger distributions of the rest.
The IMF deal will unlock more bilateral and multilateral financing in addition to the money from Saudi Arabia.
Dar has said that he foresees Pakistan’s foreign exchange reserves will have increased to $15 billion by the end of this month.
Furthermore, On Monday Fitch credit rating agency upgraded Pakistan’s sovereign rating to CCC from CCC-, and the bailout has brought some relief to investors in the country: stock and bonds.
Sharif’s union government, which is due to face a national election later this year, has to undertake more painful fiscal discipline measures to satisfy the IMF, and the central bank has raised its policy interest rate to a record high of 22% while ordinary Pakistanis are struggling with inflation driving at around 29%.