Saudi Arabia Rolls Over $3bn Deposit for Pakistan
Saudi Arabia Extends $3 Billion Deposit to Pakistan, Bolstering Reserves
Table of Contents
Published December 4, 2024
Key Developments
The State Bank of Pakistan (SBP) announced on Thursday, November 28, 2024, that saudi Arabia has agreed to extend its $3 billion deposit with the SBP for an additional year. This crucial rollover,facilitated by the saudi fund for Progress (SFD) on behalf of the Kingdom,prevents the deposit from maturing on Monday,December 2,2024.
This extension represents a continuation of Saudi ArabiaS support for Pakistan’s economy, aimed at strengthening its foreign exchange reserves and fostering economic growth and development. The initial $3 billion deposit was made in 2021 and has been subsequently rolled over in 2022, 2023, and now 2024, demonstrating a sustained commitment from Saudi Arabia.
State Bank of Pakistan’s announcement of the Saudi deposit extension on X (formerly Twitter).
Impact on Pakistan’s Foreign Exchange Reserves
While the Saudi deposit extension provides vital support, Pakistan’s overall liquid foreign reserves experienced a slight decrease in the week ending November 21, 2024. Total reserves fell to $19.605 billion,down from $19.738 billion the previous week. This decline was primarily attributed to a reduction in foreign exchange holdings by commercial banks, which decreased from $5.186 billion to $5.044 billion.
Despite this decrease,the SBP reported a modest increase in its own foreign exchange reserves,rising by $9 million to $14.560 billion during the same period.The interplay between SBP reserves and commercial bank holdings highlights the complex dynamics influencing Pakistan’s foreign exchange position.
| Reserve category | November 14, 2024 (USD Billions) | november 21, 2024 (USD Billions) | Change (USD Billions) |
|---|---|---|---|
| SBP Reserves | 14.551 | 14.560 | +0.009 |
| Commercial Bank Reserves | 5.186 | 5.044 | -0.142 |
| Total Liquid Reserves | 19.737 | 19.605 | -0.132 |
Historical Context
Pakistan has relied on financial assistance from Saudi Arabia and other allies to manage its balance of payments challenges. The $3 billion deposit was initially a critically important injection of liquidity in 2021, and its repeated extensions demonstrate the strategic importance of the relationship between the two countries. dawn News provides further details on the history of these rollovers.