China, Saudi Arabia assure Pakistan of $13 billion financial package

ISLAMABAD (5th Nov, 2022): China and Saudi Arabia have assured the Pakistani government that they will provide a financial package of $13 billion, along with the rollover of sovereign loan deposits, commercial loans, and additional SWAPS in line with the IMF (International Monetary Fund) agreement.

According to reports, Saudia Arabia and China have agreed to provide $8.8 billion and $4.2 billion respectively for the current fiscal year 2022-23, amounting to a total of $13 billion. It is believed that the financial package will allow stability to Pakistan’s unstable economy. Meanwhile, the State Bank of Pakistan currently holds foreign currency reserves of almost $8.9 billion at the moment. 

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Minister for Finance, PML-N (Pakistan Muslim League-Nawaz) leader Ishaq Dar said that both China and Saudi Arabia (KSA) have assured the Pakistani delegation during recent visits that they “will take care of Islamabad’s financial requirements till June 2023”. According to The News, Dar said, “Now the real effective exchange rate (REER) in terms of rupee against the US dollar has come down to Rs190 against the US dollar and no one will be allowed to play with our exchange rate”. 

Dar added that China has assured Pakistan they would provide $4 billion for sovereign rollover deposits as well as $3.3 billion for commercial loans. The Finance Minister further said that China would provide an additional $1.45 billion bringing the total Chinese package to $8.8 billion of which approximately $200 million has already been deposited by The Bank of China. 

According to a report by The News, the finance minister stated that although both parties have agreed upon halting work on the Mainline-1 from Karachi to Peshawar, they have also agreed to finance work on the Karachi Circulatory Railway (KCR). 

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Moreover, in the wake of the diplomatic visit to KSA, Ishaq Dar said that the Saudi government has assured they would be considering the provision of an additional $3 billion in deposits to Pakistan. The finance minister said that this would allow the opportunity for an additional $1.2 billion for the oil facility on deferred payment up till June 2023. The total financial package assured by KSA is expected to be nearly $8.4 billion. Dar also hinted that the Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud (MBS) is expected to visit Pakistan within the month. 

Dar added that the KSA authorities would help to construct a Petrochemical Complex in Gwadar at an estimated cost of $11-12 billion. On the other hand, Dar said that the Asian Infrastructure Investment Bank (AIIB) is also expected to approve $500 million to co-finance the ADB (Asian Development Bank)’s Balochistan Rural Development and Community Empowerment (BRACE) Programme. 

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