Saudi Arabia Extends $3 Billion Lifeline to Pakistan Amid Economic Challenges

Saudi Arabia extends its USD 3 billion deposit with Pakistan's central bank for another year, maintaining a vital financial lifeline during Pakistan's liquidity crunch. While the extension supports Pakistan's economic stability, analysts debate its implications, with some viewing it as a geopolitical investment with future expectations.

Saudi Arabia has opted to roll over a $3 billion deposit with Pakistan's central bank, extending the financial lifeline for an additional year. This move comes as Pakistan grapples with ongoing economic challenges and aims to bolster its foreign exchange reserves amid a liquidity crunch.

The extension, managed by the Saudi Fund for Development, continues a support mechanism initiated in 2021, designed to stabilize Pakistan's macroeconomic framework. While some analysts see this as a sign of Pakistan's economic fragility, others perceive it as a strategic geopolitical investment by Riyadh.

Despite the positive reception of the extension, critics highlight concerns about Pakistan's dependence on Gulf aid and the need for structural fiscal reforms. The SBP acknowledged the extension's role in stabilizing reserves and meeting key IMF benchmarks, though regional analysts warn of potential geopolitical strings attached.

(With inputs from agencies.)