Saudi Arabia rolls over $3bn deposits, says SBP

ISLAMABAD/KARACHI: The Saudi Fund for Development has confirmed the rollover of $3 billion deposit for the State Bank of Pakistan (SBP) maturing on December 5, 2022, for one year.

However, there was no formal announcement from the Kingdom of Saudi Arabia for provision of an additional $1.2 billion oil facility on deferred payment.

The rollover came as a big respite for the country at a time when it is struggling to secure external financing to shore up the foreign exchange reserves.

As of September 9, the SBP’s foreign exchange reserves stood around $8.6 billion, shows the data released by the central bank a few days back.

On the other hand, the IMF has sympathised with Pakistan over the devastating floods but did not commit any additional funding.

The State Bank of Pakistan (SBP) Sunday tweeted, “Saudi Fund for Development has confirmed rollover of $3 billion deposits maturing on 5th Dec 22 for one year. Deposit is placed with SBP and is part of its forex reserves. This reflects continuing strong and special relationship between KSA and Pakistan”.

The $3 billion rollover is part of $8.6 billion foreign exchange reserves held by the State Bank of Pakistan right now.

This $3 billion deposit and $1.2 billion oil facility on deferred payment was provided by KSA in November 2021 during the tenure of PTI-led government. When the incumbent Prime Minister Shehbaz Sharif visited the KSA after assuming power, a request was made for rollover of $4.2 billion for one year as well as provision of additional deposits and oil facility.

The possibility of Saudi Arabia’s Special Drawing Rights (SDRs) of one billion dollar was considered for transferring in favour of Pakistan. However, so far no formal announcement could be made on additional transfer of one billion SDRs and $1.2 billion oil facility on deferred payment.

On November 29, 2021, the KSA had officially announced that in the implementation of Saudi Royal Directive aimed at supporting the economic growth of the Islamic Republic of Pakistan, and on behalf of His Excellency Ahmed Aqeel Al Khateeb, Chairman of the Board of Directors of the Saudi Fund for Development, the CEO of the Fund Sultan bin Abdulrahman Al-Marshad had signed two economic agreements with the Pakistani government amounting to US$4.2 billion.

The first agreement, including a $3 billion deposit provided by the Kingdom of Saudi Arabia to the Central Bank of Pakistan, will help support the country’s foreign currency reserves and help mitigate the adverse effects of the Covid-19 pandemic.

The agreement was signed by Reza Baqer, Governor of the Central Bank of Pakistan, Sultan bin Abdulrahman Al-Marshad, CEO of the Saudi Fund for Development, in the presence of His Excellency the Consul General of the Kingdom in Karachi Bandar bin Fahad Al Dayel at the headquarters of the Central Bank in Karachi.

According to top official sources, the KSA had committed $1 billion investment and made a phone call to Bilawal Bhutto Zardari but afterwards, they are yet noncommittal about provision of an additional $1 billion oil facility on deferred payment.