-SBP says move reflects continuing special relationship
-IMF to support flood relief, reconstruction efforts under current programme
By Makhdoom
Shehryar Babar
ISLAMABAD: The Saudi Fund for Development (SFD) on Sunday confirmed the rollover of an $3 billion deposit for Pakistan, which will be maturing on December 5 for a period of one year.
Taking to its official Twitter account, the State Bank of Pakistan (SBP) made the announcement and said that under the programme, the deposit is placed with the central bank, adding that the funds will now become part of the $8.6 billion forex reserves.
“This reflects continuing strong and special relationship between KSA and Pakistan,” the SBP wrote. The deposit agreement was made between Pakistan and the Kingdom in November 2021, in a bid to support Pakistan’s foreign currency reserves and contribute toward resolving the adverse effects of the COVID-19 pandemic.
It should be noted that last week, the country’s foreign exchange reserves held by the SBP faced a decline of 1.9% on a weekly basis. As of September 9, SBP’s foreign currency reserves were recorded at $8,624.0 million, down by $176 million compared with $8,799.9 million on September 2.
On Friday, the Pakistani rupee registered a decline for the 11th consecutive session, closing the week at 236.84 against the greenback after losing nearly Re1 or 0.41%. The dollar now stands only Rs3.1 short of the all-time high level of Rs239.94 on July 28, 2022.
The local currency has been under pressure for the last several months due to a host of reasons, including fast depleting foreign exchange reserves. With the rollover of the KSA deposit, the investors’ sentiment is expected to stabilise.
Separately, the International Monetary Fund (IMF) on Sunday said it would support flood relief and reconstruction efforts in Pakistan under the current programme agreed to between the two, according to a statement from the IMF’s resident representative in the country, Esther Perez Ruiz.
The statement said that the IMF was “deeply saddened” by the devastating impact of the recent floods in Pakistan and extended its sympathies to the millions of flood victims.
“We will work with others in the international community to support, under the current programme, the authorities’ relief and reconstruction efforts, and especially their ongoing endeavour to assist those affected by the floods while ensuring sustainable policies and macroeconomic stability,” the statement said.
Floods from record monsoon rains and glacial melt in the mountainous north have affected 33m people and killed more than 1,540 since June 14, washing away homes, roads, railways, livestock and crops, in damage estimated at $30 billion.
Both the government and UN Secretary-General Antonio Guterres have blamed climate change for the extreme weather that led to the flooding, which submerged nearly a third of the country. They have also negatively impacted the economy and market which were otherwise expected to improve after the IMF bailout package.
Last month, the IMF’s Exe¬cu¬tive Board completed the combined seventh and eighth revi¬ews of a loan facility for Pak¬is¬tan, allowing immediate disbursement of $1.1bn to the country.
An official IMF statement pointed out that the disbursement “brings total purchases (money made available) for budget support under this arrangement to about $3.9bn.”
This Extended Fund Facility (EFF) arrangement — signed in July 2019 — was to provide $6bn to Pakistan during a 39-month period. The IMF board had approved an extension of the programme until end-June 2023.
The board had also approved “rephasing and augmentation” of Pakistan’s access to the funds by SDR720m ($934m) which would bring the total access under the EFF to about $6.5bn.
