Increasing deposits in Pakistan’s central bank among Saudi Arabia’s USD 5 billion plan: report

Islamabad: Days after Pakistan Prime Minister Shehbaz Sharif met with Saudi Arabia’s Crown Prince Mohammed Bin Salman, the two countries have agreed to increase Saudi deposits in the Central Bank of Pakistan from USD 3 billion to USD 5 billion, a media report said on Wednesday.

Sharif was on an official visit to Saudi Arabia from April 6 to 8 and a joint statement after the conclusion of his visit, among other issues, said that emphasis was placed on the Gulf Kingdom's supportive role in Pakistan's cash-strapped economy and the mutual desire to strengthen trade and investment ties.

“Both parties affirmed their commitment to expediting the first wave of investment package worth USD 5 billion which was discussed previously,” the statement read.

The proposed Saudi investments come when Pakistan is facing a severe economic crisis, with high inflation rates and a shortage of foreign currency.

Incidentally, the quantum of the proposed increase in deposits by Saudi Arabia in the Central Bank of Pakistan is equal to or more than the USD 3 billion standby arrangement approved by the International Monetary Fund in July last year.

Apart from increasing the Saudi deposits in Pakistan’s central bank, “the agreements also included injecting investments into a new oil refinery and copper mines,” The News International said, quoting a post by Mohammad Al-Qahtani, CEO of Saudi Arabia Holding Company.

These steps are part of a broader agreement previously reached, where Saudi Arabia is in talks to invest USD 21 billion in Pakistan, the newspaper said, adding, that this includes establishing a copper mine at USD 7 billion and establishing an oil refinery at USD 14 billion.

These investments are seen as a positive step towards strengthening economic relations between Pakistan and Saudi Arabia, supporting the Pakistani economy and creating new job opportunities, the report said.

Sharif had described the agreement as “historic” and a “milestone” in the relationship between the two countries.

Pakistan hopes that these investments will help improve its economy and create new job opportunities. Pakistan has a strong and reliable ally in Saudi Arabia which has been providing extensive financial and political support for a long time, it added.