Pakistan receives US$3 billion loan from Saudi Arabia Reuters

© Reuters. File picture: Saudi Arabia’s Crown Prince Mohammed bin Salman met with Pakistani Prime Minister Imran Khan on October 15, 2019 in Riyadh, Saudi Arabia. Bandar Algaloud/Saudi Royal Court/Handout via Reuters

Said Raza Hassan

Karachi, Pakistan (Reuters)-Pakistan’s prime minister’s financial adviser stated that Pakistan received a US$3 billion loan from Saudi Arabia on Saturday as part of its economic support plan.

This South Asian country is facing increasingly serious economic challenges, with high inflation, declining foreign exchange reserves, expanding current account deficits and currency devaluation.

According to central bank data, Pakistan’s current foreign exchange reserves total USD 22,498 billion.

Shaukat Tallinn, financial adviser to Pakistani Prime Minister Imran Khan, said on Twitter: “I want to thank His Excellency Crown Prince Mohammed bin Salman and the Kingdom of Saudi Arabia for their kind gestures.”

According to the terms of the package signed last month, Saudi Arabia’s loan term is one year and the interest rate is 4%.

Saad Hashemy, executive director of BMA Capital, said: “This is good news… it will help boost foreign exchange reserves and foreign exchange market sentiment.”

A week ago, the International Monetary Fund and Pakistan agreed on measures needed to resume the stalled US$6 billion financing plan.

After the review, which has been pending since earlier this year, is completed, it will provide $750 million in IMF special drawing rights, or about $1 billion, bringing total expenditures to date to about $3 billion.

The Central Bank of Pakistan has raised its benchmark interest rate by 150 basis points to 8.75% in response to inflationary pressures.

The inflation rate rose to 11.5% in November from 9.2% a month ago.

The exchange rate of the Pakistani rupee against the US dollar closed at 176.77 on Friday, depreciating more than 11% since the beginning of the year.

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