Saudi financial assistance to Pakistan’s economy provided as a safety valve for its continuity and stability, enabling it to deal with economic repercussions.
Asharq Al-Awsat kept count of recent agreements between Riyadh and Islamabad and discovered that Saudi support has increased by more than $21.64 billion over the past four years, covering a variety of activities such as aid, support, investment, and deposits.
Recent economic crises and a difficult financial situation in Pakistan were forced on by a number of global financial issues, the effects of the coronavirus epidemic, the Russian-Ukrainian war, high inflation rates, and oil prices.
However, Saudi support to the Pakistani economy helped it fulfill its obligations to banks and other international financial institutions, urging it to overcome these problems, strengthening its foreign exchange reserves, and allowing it to expand stably.
Through the Saudi Fund for Development, Saudi Arabia contributed roughly $5.4 billion to finance Pakistan’s oil derivatives. It provided roughly $1.2 billion in support of the government and to finance the Pakistani oil derivatives market in October 2021.
The Central Bank of Pakistan received a $3 billion deposit from the Saudi Fund for Development in November to help the nation’s foreign exchange reserves and address the country’s global recession.
The Saudi government announced last week that it will be considering raising the deposit amount after extending the term for the deposit in December.
King Salman bin Abdulaziz, the Custodian of the Two Holy Mosques, issued instructions in August to spend $1 billion on Pakistan’s economy.
Crown Prince Mohammed bin Salman also gave directives last week, to study and increase the Kingdom’s investments in Pakistan to reach 10 billion dollars.
Economic reports indicate that the trade exchange between Saudi Arabia and Pakistan reached $4.2 billion during the second quarter of 2022.
Despite transfers estimated to have totaled $4.4 billion over the most recent fiscal year, the approximately 1.1 million Pakistanis who work in Saudi Arabia are a vital economic contributor to Pakistan.
The Pakistani economy has been in a challenging period and financial suffering due to economic difficulties since 2019. One notable example is the significant lack of foreign exchange reserves, which reached $5.6 billion, the lowest level in approximately nine years.