KARACHI: Pakistan has received the first tranche of $1 billion from Saudi Arabia under the $6-billion financial package.
The State Bank of Pakistan (SBP) confirmed that it had received $1 billion from Riyadh, giving a boost to the foreign currency reserves. Earlier, the reserves had contracted fast and dropped to a four-and-a-half-year low of $7.48 billion by November 9, 2018, according to the central bank.
The soft loan from Riyadh will be reflected in the country’s reserves when data is updated on Thursday this week.
SBP spokesman Abid Qamar revealed that Saudi Arabia would release another $2 billion in two equal tranches over the next two months under an understanding the two sides reached during Prime Minister Imran Khan’s visit to Riyadh last month to attend an international conference titled “Future Investment Initiative”.
Saudi Arabia had agreed to park $3 billion in Pakistan’s foreign currency reserves for a year and establish a credit line worth $3 billion for the sale of petroleum products on credit for three years.
The release of the soft loan is expected to put Pakistan in a better position in negotiations with the IMF and it can reach an agreement for a bailout of around $6 billion on softer conditions. The IMF team has been in Islamabad since November 7.