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Saudi Arabia vows to help Pakistan’s finances ‘as much as it can’

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  • Saudi finance minister says kingdom will help Pakistan’s finances.
  • Reserves fall below $7bn for first time since Jan 2019.
  • Earlier this month, Saudia Arabia extended term of $3bn deposit.

Saudi Arabia Finance Minister Mohammed Al Jadaan said the kingdom would help Pakistan’s finances as it looks to help shore up alliances with countries struggling due to soaring inflation, Bloomberg reported Thursday.

Addressing a press conference in Riyadh, Al Jadaan said the Saudi government will “continue to support Pakistan as much as we can.”

In order to bolster its relationships, the kingdom has taken several steps to provide financial support to Pakistan as the cash-strapped nation desperately seeks support from international partners.

Earlier this month, Saudia Arabia extended the term of a $3 billion deposit to boost foreign currency reserves and help Pakistan in overcoming the economic repercussions of the cataclysmic floods.

The finance minister also shared that Riyadh was also looking to do more investments in Egypt and is planning to start doing deals in Turkey.

“Our relationship with Turkey is improving greatly, and we hope to have investment opportunities,” he said. 

“We have started investing aggressively in Egypt and we will continue to look at investment opportunities and that is more important than deposits. Deposits can be pulled but investments stay.”

It should be noted that Pakistan is in dire need of funds as the country’s foreign exchange reserves held by the central bank fell $784 million to $6.7 billion as of December 2.

The decline means the reserves have fallen further from November’s barely one month of import cover, even as it battles decades of high inflation and scrambles to secure International Monetary Fund (IMF) funds.

The country’s foreign exchange reserves have fallen below the $7 billion level for the first time since January 2019. The current reserves stand at around $6.7 billion — almost equal to $6.6 billion on January 18, 2019.

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Over 600 points are added by PSX in intraday trading.

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Tuesday’s lunchtime trading on the Pakistan Stock Exchange saw favorable activity.

During intraday trading, the benchmark KSE-100 Index increased by 672.08 points, or 1.11%, and was trading at 61131.82 levels.

The KSE-30 Index was trading at 20,558.31 after adding 211.46 points, or 1.04%.

The Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Peoples’ Party (PPP) had another round of discussions for the establishment of a central government the day before the rally in the local stock exchange.

In the meanwhile, Fitch Ratings has issued a warning, stating that the likelihood of default would rise in the event of a drawn-out discussion or the inability to reach an agreement with the International Monetary Fund (IMF).

According to the State Bank of Pakistan, which reported net foreign reserves of $8 billion as of February 9, 2024, up from a low of $2.9 billion on February 3, 2023, Pakistan’s external situation has improved recently.

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The smartphone app “Tajir Dost” to tax Pakistani businesses is anticipated to launch on February 22.

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The sources stated that the caretaker administration aims to include 3.5 million shops in the tax net by use of the “Tajir Dost” app.

They said that Anwaar-ul-Haq Kakar, the acting prime minister, has instructed the relevant authorities to conclude their engagement with the retailing bodies within a few days.

The introduction of the “Tajir Dost” smartphone app to impose taxes on several merchants was authorized earlier this month by the acting federal administration.

The smartphone application, created by Pakistan Revenue Authority Limited (PRAL), a division of the Federal Board of Revenue (FBR), is intended to serve as a registration tool for shops and dealers throughout the nation.

The app’s database will be updated with the traders’ information who have already registered with the FBR.

Previously, in December 2023, the Federal Board of Revenue (FBR) made history by collecting Rs1.021 trillion. After deducting refunds of Rs 38 billion that were given out that month, the FBR’s net collection increased to Rs 984 billion.

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SBP confirms the choice to use new currency notes was not influenced by the IMF.

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In response to recent rumours, Saleem Ullah, the deputy governor of the State Bank of Pakistan (SBP), said on Thursday that the International Monetary Fund (IMF) had no influence over the decision to release new currency notes.

Saleem Ullah underlined in an interview that printing new notes is a regular procedure carried out every 15 to 20 years to maintain the currency’s integrity.

He stressed that, in contrast to rumours, the deficit is expected to decline in the next fiscal year, in line with the goals of the new monetary policy.

“Every 15 to 20 years, new notes are printed,” he clarified. The new currency’s goal is to keep the note’s integrity intact.”

The SBP assured the public earlier this week that the current banknote series will continue to be in circulation despite the introduction of new currency notes, which it intended to implement over the course of the next two years.

Regarding the latest series of currency notes, the deputy governor clarified that they were launched in 2005 and were in circulation for three years.

He admitted that the procedure was time-consuming and estimated that because of the careful preparation required, it would take around two years to issue the first note.

In addition, he guaranteed that the new banknotes will have improved security measures because they would be made using contemporary technology. He gave information regarding the SBP’s effort to get public feedback on the new currency notes’ design, highlighting the fact that recommendations were being actively sought from the populace.

“There are three prizes for each denomination, and there are a total of seven denominations, hence 21 prizes,” he disclosed, highlighting the process’ openness. First place is worth Rs 1 million, second place is worth Rs 500,000, and third place is worth Rs 300,000.

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