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Saudi Arabia Supports Pakistan’s Economy with $20 Bn in 4 Years

Saudi Arabia and Pakistan officials signed oil and energy derivatives financing contracts last week (Asharq Al-Awsat)
Saudi Arabia and Pakistan officials signed oil and energy derivatives financing contracts last week (Asharq Al-Awsat)
    Riyadh - Mohammed al-Mutairi
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Saudi Arabia Supports Pakistan’s Economy with $20 Bn in 4 Years

Saudi Arabia and Pakistan officials signed oil and energy derivatives financing contracts last week (Asharq Al-Awsat)
Saudi Arabia and Pakistan officials signed oil and energy derivatives financing contracts last week (Asharq Al-Awsat)

Saudi support for the Pakistani economy constituted a safety valve for its stability and continuity, allowing it to face economic repercussions.

Asharq Al-Awsat monitored recent agreements between Riyadh and Islamabad, revealing that Saudi support has doubled in the last four years, exceeding $21.64 billion, in a diversified portfolio including aid, support, investment, and deposits.

In recent years, successive Pakistani governments faced several economic crises and a difficult financial situation resulting from multiple global financial problems, the repercussions of the coronavirus pandemic, the Russian-Ukrainian war, high inflation rates, and energy prices.

However, Saudi support to the Pakistani economy contributed to its survival by helping it fulfill its obligations towards banks and international financial institutions, pushing the Pakistani economy towards overcoming these crises, supporting foreign currency reserves, and enabling it to grow sustainably.

Saudi Arabia provided about $5.4 billion to finance Pakistan’s oil derivatives through the Saudi Fund for Development. In October 2021, it offered about $1.2 billion to finance the Pakistani oil derivatives trade and support the state.

In November, the Saudi Fund for Development deposited $3 billion to the Central Bank of Pakistan to address the economic plunge in the country and support its foreign currency reserves.

The Saudi government extended the deposit term in December and announced last week its intention to consider increasing the amount.

In August, the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz, gave directives to invest $1 billion in the Pakistani economy.

Crown Prince Mohammed bin Salman also gave directives last week, to study and increase the Kingdom's investments in Pakistan to reach 10 billion dollars.

Economic reports indicate that the trade exchange between Saudi Arabia and Pakistan reached $4.2 billion during the second quarter of 2022.

About 1.1 million Pakistanis work in Saudi Arabia, with remittances during the past fiscal year estimated at $4.4 billion, constituting an essential tributary to the Pakistani economy.

Since 2019, the Pakistani economy has been going through a difficult phase and financial distress amid economic crises, notably the severe shortage in foreign exchange reserves, reaching $5.6 billion, the lowest level in about nine years.

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Egypt, IMF Hold New Discussions to Alleviate Citizens’ Financial Burdens

Sisi and IMF Managing Director Kristalina Georgieva. (Reuters file photo)
Sisi and IMF Managing Director Kristalina Georgieva. (Reuters file photo)
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Egypt, IMF Hold New Discussions to Alleviate Citizens’ Financial Burdens

Sisi and IMF Managing Director Kristalina Georgieva. (Reuters file photo)
Sisi and IMF Managing Director Kristalina Georgieva. (Reuters file photo)

Egypt and the International Monetary Fund (IMF) have agreed to review their joint credit facilitation program to ensure that no additional burdens are placed on citizens.

Egyptian Prime Minister Mostafa Madbouly reiterated the government’s commitment to “maintaining a flexible exchange rate in coordination with the central bank to safeguard the progress achieved in this area.” He expressed hope that the meetings with the IMF delegation in the coming days would “conclude the fourth review of the economic reform program.”

Following a meeting on Sunday between President Abdel Fattah al-Sisi and IMF Managing Director Kristalina Georgieva in Cairo, the Egyptian Presidency announced that Georgieva expressed her “full understanding of the significant challenges Egypt faces amid regional and global developments.”

In March, Egypt signed an $8 billion extended financial support package with the IMF, which requires reducing subsidies on fuel, electricity, and essential goods and allowing the Egyptian pound to float.

In late October, Sisi warned that his government might need to reassess its program with the IMF if international institutions do not account for the extraordinary regional challenges the country is facing. He cited a nearly 60% drop in Suez Canal revenue due to security tensions in the Red Sea as an example.

During the meeting with Georgieva, Sisi expressed Egypt’s commitment to continuing its cooperation with the IMF, building on progress to boost economic stability and reduce inflation. However, he stressed the need to acknowledge recent challenges Egypt has faced due to regional and international crises, which have impacted foreign currency reserves and budget revenues.

Sisi reiterated that the government’s primary focus is on alleviating pressures on citizens, particularly by controlling inflation and curbing rising prices, while also continuing efforts to attract investments and empower the private sector to drive employment and growth.

Georgieva, in turn, commended Egypt’s recent efforts and the reform program being “carefully implemented with a focus on the most vulnerable.” She highlighted the progress in macroeconomic indicators despite unprecedented current challenges, noting that this has been reflected in positive assessments from international credit rating agencies, improved credit ratings, and increased investments.

She expressed her “full understanding of the significant challenges Egypt faces amid regional and global developments” and emphasized the IMF’s commitment to working with the Egyptian government to identify optimal reform paths.