Saudi Arabia will deposit US $3 billion in Pakistan's foreign reserves in a week or so for a year at 4 per cent interest under a support package signed on Monday, a finance ministry spokesman said on Tuesday.
The South Asian nation has faced growing economic challenges with sliding foreign reserves, a widening current account deficit, a depreciating currency and high inflation.
The central bank said that Pakistan's total liquid foreign reserves stand at US $22.77 billion.
The Saudi support package that included a US $1.2 billion oil loan facility was agreed during Prime Minister Imran Khan's visit to Riyadh last month.
Finance Ministry spokesman Muzammil Aslam told Reuters: "Hopefully this week or early next week the Saudi deposit will land in Pakistan's foreign reserves. He said it was a one year demand deposit with 4 per cent interest.
The agreement was signed by the Central Bank on Monday and signed by Chief Executive Officer Sultan Bin Abdul Rahman Al-Marshad of the Saudi Fund for Development SFD and Pakistan's State Bank Governor Reza Baqir.
SFD will place a deposit of USD 3 billion with SBP under this deposit agreement. It said the deposit amount will become part of SBP's Foreign Exchange Reserves.
The Saudi facility was a week after the International Monetary Fund IMF agreed with Pakistan on measures needed to revive a stalled US $6 billion funding programme. Since the end of the year, the total disbursements would reach around US $3 billion, and there would be 750 million in IMF special drawing rights, or around US $1 billion, the statement said.
The central bank has increased its benchmark interest rate by 150 basis points to 8.75 per cent to counter inflationary pressures and to preserve stability with growth. In October, headline inflation had reached 9.2 per cent, up from 8.4 per cent two months earlier, and the Pakistani rupee closed at 175.72 at the inter-bank against a dollar has depreciated over 11 per cent since the beginning of the year.