Saudi Arabia releases second $1b loan tranche

Forex reserves of Pakistan go up to more than $8 billion

KARACHI: Pakistan on Friday received a second tranche of $1 billion in financial assistance from Saudi Arabia under the $6-billion package announced earlier aimed at stabilising the fast dwindling foreign currency reserves.

The inflow has pushed the reserves above $8 billion compared to a four-and-a-half-year low of $7.26 billion on December 7, 2018, according to an official of the State Bank of Pakistan (SBP).

The loan has improved the country’s capacity to pay for imports and conveniently pay off upcoming external debt installments in the current fiscal year 2018-19.

Earlier, Riyadh parked $1 billion in Pakistan’s foreign currency reserves in November. It is expected to release the third and last tranche of $1 billion in January 2019.



The kingdom had agreed to park $3 billion in Pakistan’s foreign currency reserves for a year and establish a credit line of $3 billion for the sale of petroleum products over three years. The credit line will be available to Pakistan from January 2019 onwards. This would also help Pakistan in making import payments and debt repayment.



An analyst commented that the Riyadh loan would fail to stabilise the foreign currency reserves in the long run as they were shrinking by over $1 billion every month.

Published in The Express Tribune, December 15^th, 2018.

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