Saudi Arabia Gives $2 Billion Boost to Pakistan’s Ailing Economy
Pakistan received a $2 billion boost from the Kingdom of Saudi Arabia just when there was barely enough to cover a month of controlled imported. The financial injection comes ahead of a critical meeting of the International Monetary Fund on the new bailout package.
Ishaq Dar, the Pakistani Finance Minister, thanked the kingdom for bolstering Pakistan’ foreign exchange reserves. He said the inflow has increased the forex reserves held by the State Bank of Pakistan (SBP) and will be reflected in the forex reserves for the week ending July 14, 2023. The minister extended the country’s heartfelt thanks to the leadership of Saudi Arabia for their great gesture and support by placing $2 Billion with the SBP.
Pakistani prime minister Shehbaz Sharif also highlighted his gratitude to the Kingdom of Saudi Arabia and Crown Prince Mohammad Bin Salman for ensuring financial support for the cash-strapped country. “It reflects the growing confidence of our brotherly countries and the international community in Pakistan’s economic turnaround. We remain committed to making all necessary efforts to improve Pakistan’s economy.”
The IMF is also expected to approve a much-needed $3 Billion loan to Pakistan to help the country overcome an economic crisis. The country is facing the risk of a default due to its massive external debt obligations, and worsened by skyrocketing inflation, and internal political conflict. It has been exacerbated by the derailment of the $6.5 Billion IMF program Pakistan entered in 2019.
The economic crisis has been further deepened by the decline in the value of Pakistani currency, which was driven by the country’s inability to repay its foreign debt. Pakistan’s economic model is also to blame as it’s based on borrowing more, resulting in bankruptcy. It has to repay a massive $80 Billion in foreign debt.