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Tag: Saudi Arabia

  • Pakistan commits to 4% annual profit on $2 billion deposit from Saudi Arabia

    Pakistan commits to 4% annual profit on $2 billion deposit from Saudi Arabia

    According to reliable sources, Pakistan has agreed to pay an annual profit of four per cent to Saudi Arabia on a deposit of $2 billion with the State Bank of Pakistan (SBP) for a duration of one year.

    This decision was made to fulfill one of the prerequisites set by the International Monetary Fund (IMF), which demanded that Pakistan secure external funding of approximately $6 billion, according to Brecorder.

    Additionally, the United Arab Emirates (UAE) has also confirmed to the IMF that it will deposit $1 billion with the State Bank of Pakistan.

    On May 10, 2023, the Finance Division presented an additional agenda item to the Federal Cabinet, informing them that the Kingdom of Saudi Arabia, through its Ministry of Finance, had agreed to deposit $2 billion with the State Bank of Pakistan for a one-year period. The proposed annual profit rate was set at 4 per cent.

    The draft Deposit Agreement, provided by the Saudi side, was sent to the Ministry of Law and Justice and the Office of the Attorney General for Pakistan for examination and clearance in accordance with the Cabinet’s decision on May 14, 2019.

    Upon approval by the Federal Cabinet, the Finance Division of the Government of Pakistan will authorize the State Bank of Pakistan to proceed with the Deposit Agreement. The Ministry of Law and Justice has given its clearance to the draft

    Agreement, subject to the completion of all necessary formalities, while the Federal Board of Revenue (FBR) has granted its approval for tax exemption.

  • Pakistan fails to meet Hajj quota due to rising inflation and dollar shortage

    Pakistan fails to meet Hajj quota due to rising inflation and dollar shortage

    On Wednesday, sources within the Ministry of Religious Affairs reported that the government has decided to return Pakistan’s quota of Hajj pilgrimage to Saudi Arabia due to a shortfall of applications caused by rising inflation.

    This year marked the first time a quota for Hajj pilgrimage was available in the country, but the shortage of dollars and rising inflation prevented Pakistanis from applying for Hajj.

    The final decision to return the Hajj quota will be made by the federal cabinet. The authorities considered giving the official Hajj quota to private operators after a few applications turned out for the government scheme. However, this option would lead to private operators collecting dollars from the open market, causing unnecessary demand for foreign currency.

    Pakistan had been demanding an increase in the Hajj quota, allowing 179,210 pilgrims to 202,000 or 201,000 pilgrims. This year, the country received its complete quota of 179,000 pilgrims after many years but couldn’t utilize it entirely. It’s worth noting that the cost of government-sponsored Hajj is around Rs1.2 million.

    Due to an acute shortage of the greenback amid the collapsing economy, the Ministry of Religious Affairs and Interfaith Harmony decided to allocate a 50% special quota in the Government Hajj Scheme-2023 for pilgrims who will pay in US dollars. However, a quota of 89,605 Hajj pilgrims was set under the government scheme, falling short of 9,000 applicants.

    The government received 72,869 applicants under the regular scheme and only 8,000 under the sponsorship scheme. Moreover, 28,679 additional applications were received under the official regular scheme against the quota of 44,190. Additional applicants are being sent for Hajj pilgrimage without a lucky draw.

    The sources indicated that a total of $235 million is required for the government scheme, some of which will be provided by the sponsorship scheme and the rest by the government.

  • Saudi Arabia and UAE pledge $3 billion to Pakistan as IMF agreement nears

    Saudi Arabia and UAE pledge $3 billion to Pakistan as IMF agreement nears

    On Monday, Finance Minister Ishaq Dar stated that Pakistan has fulfilled all conditions set by the International Monetary Fund (IMF). He expressed hope that the IMF would soon sign the staff-level agreement, which would allow for the release of the $1.1 billion tranche.

    Since February, the two parties have been negotiating various conditions and external financing from friendly nations before signing the agreement. Speaking to Geo News, Dar stated that Saudi Arabia and the United Arab Emirates (UAE) have informed the IMF of their commitments to provide $3 billion to Pakistan.

    Riyadh has pledged $2 billion, while Abu Dhabi has promised $1 billion. The IMF has also been notified of this, according to Dar. The finance minister emphasized that all conditions for the staff-level agreement have been met, and he expressed optimism that the IMF’s Executive Board would approve it soon.

    The country’s foreign exchange reserves have dwindled to cover barely a month of imports since the IMF funding stalled in November. Pakistan must resume the bailout package, which was agreed upon in 2019 and is worth $6.5 billion, to avoid risking default on external payment obligations.

    Pakistan had to take several steps demanded by the IMF, including reversing subsidies in its power, export, and farming sectors, raising energy and fuel prices, imposing a permanent power surcharge, among other measures.

    These moves have pushed Pakistan’s inflation to its highest level ever, rising to over 35 per cent YoY in March. The IMF programme will disburse another tranche of $1.4 billion to Pakistan before it ends in June, and it will unlock other bilateral and multilateral financing for the cash-strapped country.

    In recent weeks, neighbouring China has rolled over $2 billion and refinanced another $1.3 billion.

  • Nawaz Sharif, Maryam meet Saudi Crown Prince

    Pakistan Muslim League-Nawaz (PML-N) supremo Nawaz Sharif along with his daughter Maryam Nawaz met Saudi Crown Prince Mohammed bin Salman to discuss bilateral relations and the current problems faced by Pakistan.

    The meeting was confirmed by Federal Minister for Information and Broadcasting Marriyum Aurangzeb, she said: “The leaders discussed further improving Saudi-Pak brotherly relations and solutions to the issues Pakistan is facing. Nawaz Sharif expressed his good wishes for the Saudi leadership.”

    Nawaz and his family are currently in Saudi Arabia, where they performed Umrah.

    The Sharif family reached Saudi Arabia on April 11 on the invitation of the royal family. The former Prime Minister (PM) is visiting Saudi Arabia after six years.

    According to media reports, Saudi’s King Salman bin Abdulaziz invited Nawaz — who is considered close to the royal family — and Prime Minister (PM) Shehbaz Sharif to the kingdom as a gesture of goodwill.

    It is also speculated that Nawaz may come to Pakistan after winding up the tour of Saudi, however, there has been no official confirmation yet.

  • Pakistan to receive $2 billion deposit from Saudi Arabia in State Bank within next few days

    Pakistan to receive $2 billion deposit from Saudi Arabia in State Bank within next few days

    Muhammad Jawad Sohrab Malik, the Special Assistant to the Prime Minister, had a meeting with Nawaf bin Said Al-Malki, the Ambassador of the Kingdom of Saudi Arabia to Pakistan, in Islamabad. The objective of the meeting was to discuss the ways to enhance bilateral collaboration between the two countries.

    During the meeting, Jawad expressed gratitude for Saudi Arabia’s consistent support for Pakistan. He thanked the ambassador for confirming that the $2 billion pledged by the Kingdom would be deposited within the next seven working days in the SBP account. Both parties showed a commitment to strengthening bilateral ties between Pakistan and Saudi Arabia.

    The SAPM highlighted the significance of Saudi Arabia’s assistance and stated that the $2 billion loan would help Pakistan overcome the current financial crisis. He further explained that this would pave the way for securing similar assurances not only from the IMF but also from other friendly countries such as the United Arab Emirates, Qatar, and others, which would lead to the much-awaited staff-level agreement (SLA) with the IMF and unlock multilateral disbursements.

    Nawaf bin Said Al-Malki emphasized the Kingdom’s commitment to building long-term, sustainable investment transactions between Saudi Arabia and Pakistan. He reiterated Saudi Crown Prince Mohammed bin Salman’s pledge to increase Saudi Arabian investments in Pakistan’s energy and IT sectors to $10 billion within the next few years.

    The Saudi envoy expressed keen interest on behalf of the Saudi government in recruiting more manpower from Pakistan during the current and next year for various sectors of the kingdom. He stated that the Saudi labor market is continuing to expand, mainly due to the launch of several mega projects under Saudi Vision 2030.

    While highlighting the diverse business landscape in Pakistan, the SAPM expressed that Pakistan has a lot to offer in both the goods and services sectors. He commended the Kingdom’s commitment to providing enhanced employment opportunities for the Pakistani workforce in its future development ventures, as well as the valuable contributions of Saudi FDI in boosting the country’s economic outlook.

    During the meeting, both dignitaries engaged in fruitful discussions on the further strengthening of bilateral business relations, recruitment of more workforce from Pakistan, and enhancing FDI in potential sectors of the economy. Both the Saudi Ambassador and SAPM Jawad Sohrab Malik expressed confidence that their discussions would pave the way for a new era of deeper and more meaningful collaboration between Pakistan and Saudi Arabia.

  • IMF seeks further assurances from Pakistan despite Saudi Arabia and UAE confirmation

    IMF seeks further assurances from Pakistan despite Saudi Arabia and UAE confirmation

    The International Monetary Fund (IMF) is seeking further assurances from Pakistan, despite confirmation of financial assistance from Saudi Arabia and the United Arab Emirates (UAE), to ensure that Pakistan has met the condition of arranging $6 billion financing in order to reach a staff-level agreement.

    Nathan Porter, the IMF’s Mission Chief to Pakistan, welcomed the announcement of financial assistance from the two “key” friendly countries, stating that the IMF supports the efforts of the Pakistani authorities. A Pakistani delegation is currently in Washington attending the Spring meetings of the IMF to discuss the revival of the loan programme. Pakistan’s Finance Minister Ishaq Dar was unable to attend due to domestic issues.

    Pakistan had been asked to arrange $6 billion in external financing, which it needed from now until June to avoid default. Saudi Arabia has pledged $2 billion, while the UAE has committed $1 billion, thus reducing the now-required amount to $3 billion. Pakistan’s foreign exchange reserves have fallen to cover barely a month of imports after the IMF funding stalled in November, hit by snags over fiscal policy adjustments after officials of the lender visited Islamabad in February for talks. The IMF programme will disburse another tranche of over $1 billion to Pakistan before it concludes in June.

    IMF’s Director of the Middle East and Central Asia Department, Jihad Azour, during a press conference, briefed the media about the current status of the $6.5 billion programme with Pakistan, saying that Pakistan is at a critical juncture and decisive actions are required to stabilise the economy. Azour emphasized the need for Pakistan to address inflation, reduce the constraints on trade and export, and maintain macroeconomic stability. He also stated that financing is required, and the financing needs are about what is currently in the programme, and the IMF is working with the authorities and bilateral supporters of Pakistan to ensure that the financing needs for the programme and beyond are assured.

    Central bank governor Jameel Ahmad told investors in Washington at the spring meetings of the lender and the World Bank that programme loans from other multilateral agencies await completion of the IMF review. Pakistan is at a critical juncture, and decisive actions are required to stabilise the economy.

  • IMF receives assurance of $1 billion from UAE to support Pakistan’s economy

    IMF receives assurance of $1 billion from UAE to support Pakistan’s economy

    In a significant development towards reviving the stalled bailout programme, the authorities in the United Arab Emirates (UAE) have pledged to provide $1 billion in bilateral support to Pakistan, according to Finance Minister Ishaq Dar.

    Dar tweeted, “UAE authorities have confirmed to the IMF for their bilateral support of $1 billion to Pakistan.” He also stated that the State Bank of Pakistan is currently in the process of completing the necessary documentation to receive the deposit from the UAE authorities.

    Pakistan was required to provide assurance that its balance of payments deficit is fully financed for the remaining period of the IMF programme, which has been stalled since November last year. Last month, the IMF’s Director of Strategic Communications, Julie Kozack, emphasised that “timely financial assistance from external partners will be critical to support the authorities’ policy efforts and ensure the successful completion of the review [with Pakistan].” She added, “Ensuring that there is sufficient financing to support the authorities is the paramount priority. A Staff Level Agreement (SLA) will follow once the few remaining points are closed.”

    Earlier this month, Saudi Arabia also pledged to provide a $2 billion loan to Pakistan, according to Pakistan’s Minister of State for Finance Aisha Ghaus Pasha. The country’s economic situation has been further exacerbated by months of political and economic turmoil, crippling floods last year and record inflation. Pakistan has been grappling with a debt crisis and foreign exchange reserves have fallen to less than four weeks of imports.

    In an effort to ease the situation, China has agreed to refinance $2 billion, of which $1.7 billion has already been credited to Pakistan’s central bank. China also rolled over a $2 billion loan last month, providing relief during Pakistan’s acute balance of payments crisis. However, talks with the IMF for a delayed $1.1 billion loan tranche, part of the bailout agreed in 2019, have been ongoing.

  • Fact check: Did passengers refuse to travel with Nawaz Sharif in a plane?

    Fact check: Did passengers refuse to travel with Nawaz Sharif in a plane?

    Claim: Pakistan Muslim League-Nawaz (PML-N) supremo Nawaz Sharif has reached Saudi Arabia from London to perform Umrah.

    A fake screenshot was shared by multiple Twitter accounts that passengers have refused to travel with Nawaz in the same airplane.

    The screenshot was taken from 7News and it has the name of the reporter Rana Waheed.

    Fact: However, the news turned out to be old and the reporter himself clarified that this has nothing to do with Nawaz’s recent visit to the Kingdom.

    In a tweet, he said, “This news and screenshot are old. I left 7news three years ago, and now I am working in PNN as a special correspondent.”

    Political Secretary to Maryam Nawaz, Zeeshan Malik, also retweeted the clarification of the reporter.

    Sharif is expected to spend the last 10 days of Ramzan as well as celebrate Eid-ul-Fitr in Saudi Arabia on the invitation of the royal family.

  • Pakistan to receive written guarantee from UAE for $1 billion loan

    Pakistan to receive written guarantee from UAE for $1 billion loan

    Pakistan is making progress towards securing a loan from the International Monetary Fund (IMF) with a $1 billion financing pledge from the United Arab Emirates (UAE) expected this week. Sources suggest that the UAE will provide written confirmation of the financing to the IMF through the Finance Secretary during the current annual meeting in Washington.

    To secure external financing for this fiscal year, the IMF has asked Pakistan to seek assurances from friendly countries and multilateral partners for funding its balance of payment gap. In addition to Saudi Arabia’s $2 billion pledge, the agreement with the IMF is also contingent on the UAE’s $1 billion commitment.

    According to sources within the Ministry of Finance, the UAE has finalised the agreement, and as soon as Pakistan receives a written guarantee from the Gulf state, the IMF will also be informed. This development follows requests from Pakistan’s Prime Minister and Finance Minister to UAE officials to complete the necessary prerequisites for the Fund.

    Pakistan is currently facing one of the most severe economic crises in its history, with consumer prices at a record high and interest rates raised to an all-time high. Due to a dollar shortage, the IMF has revised its growth forecast for Pakistan to 0.5% from the earlier estimate of 2%, causing supply chain disruptions and companies to halt production.

    The IMF is also assessing the coalition government’s proposed fuel discount for lower-income groups, which is planned to be financed by raising fuel prices for wealthier motorists. The finance minister has assured that the IMF has received all the required information.

    The finance minister had cancelled his scheduled in-person meetings with IMF officials in Washington but has repeatedly claimed that the staff-level agreement with the lender would be reached soon. Islamabad has been hosting an IMF mission since January to negotiate policy measures and secure $1.1 billion in funding for the cash-strapped economy, which is on the verge of collapse.

    The funds are part of a $6.5 billion bailout package approved by the IMF in 2019, which analysts argue is crucial for Pakistan to avoid defaulting on external payment obligations. The deal will also unlock other financing options to shore up Pakistan’s foreign exchange reserves, which have fallen to four weeks’ worth of import cover and help resolve the balance of payment crisis.

  • Pakistani rupee drops to Rs287.09 versus US dollar

    Pakistani rupee drops to Rs287.09 versus US dollar

    In Monday’s interbank market, the Pakistani rupee experienced a substantial decrease against the US dollar. The State Bank of Pakistan (SBP) reported that the local currency closed at Rs287.09, down by Rs2.44 or 0.85 per cent.

    Last week, the rupee had already depreciated by 0.3 per cent, closing at Rs284.65. During the week, the currency fell in four of the five sessions, with the only gain on Thursday, the day when an official from the finance ministry announced that the International Monetary Fund (IMF) had received a financing assurance from Saudi Arabia.

    The recent drop in the value of the Pakistani rupee is partially due to the delay in the confirmation of funding from a friendly country. The staff-level agreement between Pakistan and the IMF is taking time solely because of this delay. The financing confirmation is crucial to bridge

    Pakistan’s external account gap and meet the last condition of the IMF. Until then, the currency is likely to remain under pressure.

    Meanwhile, globally, the US dollar began the week strongly after the release of US jobs data indicating a tight labour market. This firming up of expectations has led to predictions that the Federal Reserve will again raise interest rates at its meeting next month.

    In the currency market, the dollar index, which measures the US currency against six major peers, rose 0.225 per cent to 102.25, recovering from the two-month low of 101.40 that the index touched last week.

    Additionally, oil prices, a key indicator of currency parity, stabilised on Monday after rising for three consecutive weeks. This was due to looming supply cuts from Saudi Arabia and other OPEC+ producers, which balanced concerns about weakening global growth that may dampen fuel demand.