Pakistan gets $2 billion in Saudi financial support
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Pakistan has received $2 billion in financial support from Saudi Arabia, according to Finance Minister Ishaq Dar. The funds have been deposited with the central bank, helping boost Pakistan’s foreign exchange reserves, which were critically low. The support comes ahead of the expected final approval of a $3 billion bailout from the International Monetary Fund (IMF).

Dar expressed gratitude to Saudi Arabia, describing it as a significant gesture from a longstanding ally. The funds were pledged in April but were held back until the IMF bailout was confirmed. The financial assistance reflects the growing confidence of brotherly nations and the international community in Pakistan’s economic recovery, stated Prime Minister Shehbaz Sharif.

Pakistan, facing the possibility of a sovereign debt default, secured the $3 billion IMF bailout at the end of June. The IMF board is expected to grant final approval during its meeting on Wednesday. The arrangement spans nine months, with an initial upfront disbursement of approximately $1.1 billion, followed by staggered disbursements.

The IMF deal is anticipated to unlock additional bilateral and multilateral financing, along with the Saudi Arabian funds. Finance Minister Dar predicts that Pakistan’s foreign exchange reserves will increase to $15 billion by the end of the month. Fitch, the credit rating agency, upgraded Pakistan’s sovereign rating to CCC from CCC- following the bailout, bringing some relief to investors.

Pakistan’s bonds have experienced a significant rally since securing the IMF deal, with shorter-dated bonds experiencing the most substantial gains. The government will need to implement further fiscal discipline measures to meet IMF requirements, including raising the policy interest rate to a record high of 22%. This decision, coupled with high inflation of around 29%, presents challenges for ordinary Pakistanis.

Source: With Agencies

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