• Saudi Arabia to transfer $3 billion to Pakistan this week after all legal formalities were earlier finalised.
• Cash deposit will help Pakistan shore up its forex reserves.
• Saudi Arabia will charge around 3.2-3.5% markup on annual basis for the deposit.

ISLAMABAD: Information and Broadcasting Minister Fawad Chaudhry on Thursday announced that all legal proceedings have been finalized for a $3 billion investment from Saudi Arabia and this money will be released this coming week.

Making the announcement on Twitter, the information minister said Saudi Arabia had also allowed direct flights from Pakistan.

During the visit of Prime Minister Imran Khan in early October, Riyadh had agreed to renew his financial support for Islamabad, which includes about $ 3 billion in secure deposits and $ 1.2bn worth of oil assets in deferred payments.

At a time when the country’s foreign exchange reserves were declining, the Saudi $ 3 billion deposit center would help the Pakistan State Bank (SBP) to increase its declining foreign exchange reserves.

“The SBP has completed all the arrangements and now everything is ready and the agreed deposit amount will be received in the next few days,” senior official sources confirmed in a statement.

Saudi Arabia will charge about 3.2 to 3.5% mark per year for this deposit amount.

According to the central bank, Pakistan’s liquid foreign exchange reserves stood at $ 22.773 billion on November 19, 2021. The dividend figures show that the SBP’s foreign exchange reserves stand at $ 16.254 billion and the total foreign exchange reserves held by commercial banks. standing at $ 6,519 billion.

During the week ended November 19, 2021, SBP savings decreased by $ 691 million to $ 16.254 billion, mainly due to external debt repayment.

Official sources also say that Saudi Arabia has agreed to provide $ 1.2 billion to provide POL refined products and the Economic Affairs Division (EAD) is negotiating on behalf of the Pakistani government.

Responding to questions, spokeswoman for Prime Minister Muzammil Aslam said Pakistan could receive $ 7 billion from just three sources in the next 60 days.

This includes a $ 3 billion deposit from Saudi Arabia, a $ 1.2 billion Saudi Oil Facility in deferred payments, $ 800 million in oil from Islamic Development Bank, $ 1 billion in the introduction of the Sukuk bond and $ 1 billion in IMF.

All such dollars are not enough to cover the pressures on existing imports, he added.