Originally inked in 2021, the agreement underwent subsequent renewals in 2022, with the funds deposited into Pakistan’s central bank aimed at shoring up the financially strained nation’s reserves…reports Asian Lite News
The Saudi Fund for Development (SFD) has extended the duration of its $3 billion deposit to Pakistan by an additional year, as disclosed by the State Bank of Pakistan in a statement released on Wednesday.
Originally inked in 2021, the agreement underwent subsequent renewals in 2022, with the funds deposited into Pakistan’s central bank aimed at shoring up the financially strained nation’s reserves.
This extension is anticipated to fortify Pakistan’s position in future discussions with the International Monetary Fund (IMF) regarding the phased disbursement of the remaining $3 billion in funding.
Dr. Khaqan Hassan Najeeb, a former advisor to Pakistan’s ministry of finance, commented, “Certainly, the rollover helps solidify the IMF agreement as we move closer to meeting the gross financing needs of the country. This should help pave the way for the next tranche of $700 million as the board approval comes through.”
Securing external financing has been a crucial stipulation set by the IMF in the deal struck with Pakistan in July. At that time, Pakistan was on the verge of sovereign debt default and faced a balance of payments crisis. The initial disbursement by the IMF was $1.2 billion, and subsequent talks in Islamabad led to a staff level agreement, clearing the path for the release of an additional $700 million. The remaining $1.1 billion will necessitate further negotiations in the coming months before the program concludes around March.