Saudi Arabia pledges additional $3 billion deposit to Pakistan
What's the story
Saudi Arabia has pledged an additional $3 billion in deposits to Pakistan, along with extending a current $5 billion deposit for a longer term. The announcement was made during the IMF-World Bank Spring Meetings in Washington after high-level talks between Pakistani Finance Minister Muhammad Aurangzeb and Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan.
Financial assistance
Notable changes in the agreement
The most notable change in the agreement is the extension of the existing $5 billion Saudi deposit. This deposit was earlier subject to annual "rollovers," which often caused market jitters and came with strict IMF conditions. "The existing $5 billion Saudi deposits would no longer remain subject to the earlier annual rollover arrangement and would instead be extended for a longer period," Aurangzeb said.
Debt relief
Additional $3 billion deposit to aid debt repayment
The additional $3 billion deposit is expected to be released in the next week. This comes just in time for a $3.5 billion debt repayment to the United Arab Emirates (UAE) due by end-April. While the UAE had sought immediate payment, Saudi Arabia and Qatar have reportedly provided a combined $5 billion cushion to keep Pakistan's reserves from being depleted.
Ties
Saudi activate defense pact with Pakistan
The financial help comes amid growing ties between Saudi Arabia and Pakistan. Cooperation between the two nations has expanded in recent years, including a mutual defense agreement signed last year. Saudi Arabia has activated its Strategic Mutual Defense Agreement with Pakistan, resulting in the deployment of an undefined number of F-16 fighter jets and troops to King Abdulaziz Air Base in the kingdom's eastern region. However, details of this agreement remain unclear.