Pakistan said it secured $3 billion in financial support from Saudi Arabia, providing a key lifeline to shore up its foreign exchange reserves and offset a loan repayment to the UAE.
Saudi Arabia has committed additional funds with “disbursement expected in the coming week,” Pakistan’s finance ministry said in a statement Wednesday, citing its minister Muhammad Aurangzeb. It also extended an existing $5 billion deposit, which will no longer be subject to the earlier annual rollover arrangement.The financial lifeline provides a much-needed boost to Pakistan’s coffers following a surprise demand earlier this month from the UAE that Islamabad repay a $3 billion loan.
The demand came after Islamabad failed to strike an agreement with the Gulf country to roll over the debt for the first time in seven years. Pakistan will pay the amount by the end of this month.The repayment demand threatened to further strain Pakistan’s economy at a time when it is already being hit by the fallout from the war in West Asia. It also put pressure on Pakistan’s already-thin foreign-exchange reserves, which stood at $16.4 billion as of March 27.
The aid from Saudi Arabia further cements ties between the two nations after they signed a defence pact pledging that “any aggression against either country shall be considered an aggression against both.” The two countries have had many meetings about the pact since Iran began retaliatory attacks against its neighbours. Bloomberg
