Pakistan receives 2 billion dollars from UAE, Saudi Arabia

The country's central bank, the State Bank of Pakistan (SBP), on Friday confirmed that Pakistan has received the third tranche of USD 1 billion as part of balance-of-payments support from close ally Saudi Arabia.

On Thursday, the SBP tweeted that USD 1 billion has been received from the UAE. The assistance was the first part of the USD 3 billion assistance announced by the Gulf nation.

The amount was received under an agreement, signed on Tuesday, by SBP Governor Tariq Bajwa and Abu Dhabi Fund for Development Director General Saif Al Suwaidi, the SBP said.

Saudi Arabia's assistance was part of the USD 6 billion bailout package - USD 3 billion balance-of-payments support and another USD 3 billion in deferred payments on oil imports - which Riyadh had agreed in October last year.

The kingdom has already deposited USD 2 billion to provide vital cushion to Pakistan's dwindling reserves. Pakistan, which is in talks with the IMF for a bailout package, has also reportedly received financial assistance from China.

According to the SBP, Pakistan's foreign currency reserves dropped to a 57-month low of USD 6.63 billion as of January 18, 2019.

With these reserves, Pakistan can hardly cover one-and-a-half-month of imports. The reserves have continued to drop for the last two years due to the country's high foreign expenditure and low income, which is better known as the current account deficit, the Express Tribune reported.

The deficit was recorded at USD 8 billion in the first half (Jul-Dec) of the current fiscal year 2018-19, which was slightly lower than USD 8.4 billion in the same period of previous year.

This assistance has improved Pakistan's position in terms of import payments and debt repayment in the short term.

"The deposits will help Pakistan achieve financial stability and overcome economic challenges," the Foreign Office had tweeted after the agreement between Pakistan-UAE was inked with Abu Dhabi.