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Pakistan receives $ 3 billion loan from Saudi Arabia

Pakistan received a $ 3 billion loan from Saudi Arabia on Saturday, the prime minister’s financial adviser said, as part of an economic support package.

The South Asian country faces growing economic challenges, with high inflation, declining foreign exchange reserves, a widening current account deficit and a depreciating currency.

Pakistan’s total liquid foreign exchange reserves stand at $ 22,498 billion, according to central bank data.

Shaukat Tarin, financial adviser to Pakistani Prime Minister Imran Khan, said in a tweet: “I would like to thank His Excellency Crown Prince Mohammed Bin Salman and the Kingdom of Saudi Arabia for their kind gesture.”

Saudi Arabia’s loan will be for a one-year term at an interest rate of 4% under the terms of the package, which was signed last month.

“This is positive news … and it will help strengthen both foreign exchange reserves and sentiment in the forex market,” said Saad Hashemy, executive director of BMA Capital.

The loan comes a week after the International Monetary Fund agreed with Pakistan on the steps needed to revive a stalled $ 6 billion funding program.

Completion of the review, pending since the start of this year, would unlock 750 million IMF special drawing rights, or about $ 1 billion, bringing total disbursements to date to about $ 3 billion. dollars.

Pakistan’s central bank raised its key rate 150 basis points to 8.75% to counter inflationary pressures.

Inflation had reached 11.5% in November, against 9.2% a month earlier.

The Pakistani rupee, which closed on Friday at 176.77 in interbank against the dollar, has depreciated more than 11% since the start of this year.