Saudi Arabia vows to help Pakistan financially – Money

Saudi Arabia will help Pakistan, among other countries, sort out its finances and even pull it from the brink as its stock of reserves plunge.

This was stated by Saudi Finance Minister Mohammed Al Jadaan on Thursday in a news conference, Bloomberg reported.

The report, quoting Jadaan, said that Riyadh was looking to shore up alliances with countries struggling with the impact of rising inflation.

The Saudi government will “continue to support Pakistan as much as we can,” Al Jadaan said at a press conference in Riyadh.

Earlier in the week, Federal Finance Minister Ishaq Dar had met with Saudi Arabia Ambassador Nawaf bin Said Al-Malki at the finance division in Islamabad and had thanked him for rescheduling a $3 billion loan to Pakistan.

The money has been parked in Pakistan’s accounts but for all intents and purposes it cannot be touched by Pakistan. Earlier in the week, Saudi Arabia extended the term of the deposit.

Country able to meet debt obligations

It is pertinent to mention here that State Bank of Pakistan Governor Jameel Ahmad in the latest episode of the SBP Podcast series, discussed the country’s capacity to meet its international financial obligations and address concerns over external account vulnerabilities.

Ahmad said that all of Pakistan’s debt repayments are on track and that the country’s foreign exchange reserves are expected to increase in second half of the current fiscal year.

Pakistan, he said, has received foreign exchange inflows of $4 billion (excluding the rollovers of $3 billion mentioned above).

The central bank’s chief said that Pakistan will continue to repay its loans while inflows are expected to increase significantly in the second half of the current fiscal year.

Along with the rollover of some other external obligations, Pakistan’s foreign exchange reserves are expected to increase significantly in the coming months.

Globally, the war in Ukraine, a historic increase in the international commodity prices and monetary tightening pursued by central banks are major challenges. As a result of this, developing countries, including Pakistan are facing difficulties in raising funds from international financial markets. On the domestic front, the economy is impacted by floods which created challenges for Pakistan. Overall the situation is challenging; however, SBP and GoP are taking measures to improve the situation .

For the fiscal year 2023, around $33 billion have to be repaid to external stakeholders, he said, including a current account deficit of $10 billion and $23 billion in loan repayments.

Out of the payable $23 billion external debt, Pakistan has already repaid more than $6 billion. Besides this a bilateral loan of $4 billion has been rolled over with the cooperation of relevant countries.

Another $8.3 billion maturing obligations are expected to be rolled over as discussions are underway.

The remaining outstanding repayment stands around $4.7 billion for the remainder of this fiscal year.

This includes $1.1 billion in commercial loans that have to be paid to foreign banks and $3.6 billion in multilateral loans.