Saudi Arabia's Crown Prince Mohammad Bin Salman (also known as 'MBS') has directed the Kingdom's authorities to raise a deposit in the State Bank of Pakistan by $2 billion, bringing the total to $5 billion.
The assistance will provide massive support to Pakistan’s efforts to strengthen its foreign exchange reserves amid the current currency crisis.
"Saudi Arabia is studying how to augment its investments in Pakistan to reach $10 bln and increasing its deposit to Central Bank of Pakistan to $5 bln," the Saudi Press Agency reported on Tuesday.
The Saudi Fund for Development (SFD) signed an agreement with the State Bank of Pakistan in November 2022 to provide a $3 billion deposit. It was extended last month, providing massive relief to cash-strapped Pakistan.
The decision to extend the deposit and potentially increase it to $5 billion was made following discussions between the Crown Prince and Pakistan's Prime Minister Shehbaz Sharif.
Flood Relief Boost
On Monday, Pakistan secured $10.7 billion in flood assistance pledges at the International Conference on Climate Resilient Pakistan in Geneva, exceeding the target of $8 billion that was requested by Prime Minister Sharif in an appeal for flood aid.
The appeal for flood aid was made in response to the widespread destruction caused by last year's catastrophic floods, which affected 33 million people and severely damaged agriculture throughout the nation.
The additional funds will likely be used to support recovery and rebuilding efforts in affected areas.
‘Give Us Breathing Space’
Pakistan Prime Minister Sharif on Monday urged the International Monetary Fund (IMF) to pause its demands for economic reforms before providing more financial aid as the country tries to recover from catastrophic floods.
Sharif stated that Pakistan was trying its best to comply with the IMF's conditions, but it's struggling to bear the additional burdens that come with these conditions, particularly given the country's current economic challenges and the impact of the catastrophic floods.
"We will do everything to comply with the terms and conditions. Though I am constantly trying to persuade them: please give us a pause," he said during a press conference in Geneva.
The IMF has sought that Pakistan should withdraw remaining subsidies on petroleum products and electricity.
Pakistan's economy has been struggling amid a political crisis, a depreciating rupee, and high levels of inflation, which have been exacerbated by the floods and the global energy crisis.