ISLAMABAD: Saudi King Salman bin Abdulaziz has issued a directive that $1 billion be invested in Pakistan, the Saudi Press Agency reported on Thursday, with Pakistani Foreign Minister Bilawal Bhutto Zardari thanking the kingdom for its support.
The directive came during a telephone call between the Pakistani foreign minister and his Saudi counterpart Faisal bin Farhan Al-Saud.
King Salman has given the directive for the investment to support “Pakistan’s economy and its brotherly people.”
“Recalling fraternal bilateral ties, welcomed KSA commitment of $1 billion invest. in Pakistan,” Bhutto Zardari said on Twitter, about his phone call with the Saudi FM.
“Briefed my counterpart on damages caused by unprecedented floods, highly value solidarity expressed & KSAs all possible assistance.”
The Pakistani foreign minister did not specify what the investment would be used for but Pakistan is currently struggling to cope with a deadly monsoon season that has left over 900 dead and at least 30 million people homeless due to flash floods caused by torrential rains, according to the climate change ministry, which has called on the international community for assistance.
Pakistan has also been seeking to get $4 billion from friendly countries to bridge a gap in foreign reserves highlighted by the International Monetary Fund.
The IMF last week announced its executive board would meet on August 29 to review a stalled $6 billion loan program for Pakistan. Last month, the Fund said it had reached a staff level agreement with Pakistan that would pave the way for a disbursement of $1.17 billion. The board is also considering adding $1 billion to the program agreed in 2019. But it has asked Pakistan to guarantee $4 billion to bridge a gap in foreign reserves before it approves releasing the next tranche.
Last week, Finance Minister Miftah Ismail said the funds would come from “friendly countries.”
“The funding of $4 billion has been achieved through our friendly countries Saudi Arabia, UAE and Qatar,” Ismail told reporters, saying all prior actions had been met before the scheduled IMF executive board meeting.
Depleting reserves, a widening current account deficit and the depreciation of the Pakistani rupee against the US dollar have left the South Asian nation facing a balance of payment crisis.
Without the IMF deal, which is expected to open up other avenues for external finance, Ismail has previously said the country could have headed towards default.
It stated that the development came during a phone call between Saudi Foreign Minister Prince Faisal Bin Farhan Al Saud and Foreign Minister Bilawal Bhutto Zardari wherein the latter was informed about the directive.
FM Bilawal tweeted earlier today about the interaction and welcomed the investment commitment. He also said he had briefed his Saudi counterpart on the flood situation in Pakistan.
The SPA report said that the two leaders also discussed “strong Saudi-Pakistani relations and ways to boost them, as well as the regional and international issues of common interest”.
Earlier this week, State Bank of Pakistan Acting Governor Murtaza Syed had announced $4bn in financing for Pakistan from friendly countries.
“Pakistan will get $2bn from Qatar, $1bn from Saudi Arabia under the umbrella of deferred oil facility and $1bn investments from the UAE in various sectors,” he had said.
Pakistan’s gross financing needs would be around $30bn for FY23 including the amount required for CAD and debt repayments.
He had added that the available financing against this is estimated at $37bn for FY23. The amount increased after Pakistan secured $4bn of financing from friendly countries.