Sources confirmed that Pakistan would pay the Saudi government a 4 percent yearly profit on the amount deposited by Saudi Development Fund in SBP.
ISLAMABAD: The federal cabinet has approved an agreement between Islamabad and Riyadh to keep $3 billion aid from Saudi Arabia in the State Bank of Pakistan (SBP).
According to details, the cabinet endorsed the deal via a circulation summary on Saturday.
The proposed agreement with the Saudi government was forwarded to the Ministry of Law and the Office of the Attorney General. The Attorney General’s Office and the Ministry of Law reached an agreement on a draft.
Following the legal opinion, a copy of the agreement was submitted for approval to the federal cabinet. The cabinet approved the State Bank’s retention of $3 billion from the Saudi Development Fund (SDF).
The Saudi government had promised to maintain a reserve of $3 billion at the State Bank of Pakistan. According to the agreement, the aid will remain in the State Bank’s deposit account for a year.
The SBP has finalised all arrangements and now everything is in place and the amount of the agreed deposit will be received within the next couple of days. Pakistan would, however, pay the Saudi government a 4 percent yearly profit on this sum, sources confirmed.
Saudi Arabia has also agreed to provide $1.2 billion for the supply of refined POL products, with the Economic Affairs Division (EAD) negotiating on behalf of the Pakistani government.
Muzammil Aslam, Spokesperson for Adviser to the Prime Minister on Finance, said Pakistan is expecting to get $7 billion from just three sources over the next 60 days, according to a media report.
These include $3 billion in deposits from Saudi Arabia, a $1.2 billion Saudi Oil Facility with deferred payments, an $800 million Islamic Development Bank oil facility, $1 billion raised through the issuance of Sukuk bonds, and $1 billion from the IMF. All of these dollar inflows, he argued, would be sufficient to alleviate pressure on existing import bills.
The foreign exchange reserves of the State Bank of Pakistan (SBP) decreased by $691 million to $16,254.1 million in the week ending November 19, compared to $16,945.4 in the previous week.
According to data released by the State Bank of Pakistan (SBP) on Thursday last, its foreign exchange reserves fell 4.07 percent on a weekly basis. According to the central bank, the decline was witnessed mainly due to external debt repayment.
Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $22,773.8 million. Net reserves held by banks amounted to $6,519.7 million.