The impacts of another Saudi Bailout Package to Pakistan.

State Bank of Pakistan (SBP) has confirmed a second $1 billion bailout package from Saudi Arabia.

Saudi Bailout Package
A spokesperson of State Bank of Pakistan, Abid Qamar, confirmed the development of Saudi Bailout.
He said that central bank’s foreign reserves have shored up by the latest package. After the first bailout package from Saudi Arabia in November, Pakistan had seen some relief.
Previous approvals:

A brief history:

In October, Riyadh had agreed to give $6 billion currency support to Pakistan. $3 billion balance of payments support and $3 billion in deferred payments on oil import. It had also agreed to provide one-year deferred payment facility to Islamabad.

Country’s total debt:

The Prime Minister Imran Khan had in October shared the figures of country’s total debt. Rs 30000 billion has been recorded within last decade and Rs1200billion recorded as circular debt.

PM’s visit to Saudi Arabia:

During his visit to Saudi Arabia, PM Khan had held detailed meetings on bilateral relation among two sides. The Saudi Crown Prince Mohammed bin Salman had agreed to the premier’s suggestion for reduction of Saudi visa fee for Pakistani workers.
The Saudi Crown Prince had called it a significant step towards enhancing Pakistan’s workforce in the Kingdom, as well as facilitating travel of people from both countries.
While addressing at the investment conference in Riyadh, PM Khan had also told about the talks with International Monetary Fund (IMF) over a bailout.
But in recent days, the premier has sought to avoid IMF packages. He wants to appeal to friendly countries for bilateral financial support.

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Finance Minister Asad Umar had also warned that the country is heading fast towards bankruptcy.
He promised to end the country’s reliance on IMF bailouts, as officials prepared to assign a new loan.

The impacts of Saudi Bailout Package:

The package is going to boost the economic activities in Pakistan. With one billion dollars flowing into the country, it will give the economy a boost.

It will also give a positive signal to other investors. When they see a major investor like Saudi Arabia investing in Pakistan, they will also be encouraged to do so.

Conclusion:

To seek economy support, PTI government has also approached other friendly countries including China, UAE, and Malaysia.
This second bailout package by Saudi Arabia will boost Pakistan’s foreign exchange reserves, which fell to $7.3 billion in last week.
Value of rupee will be stabilized against US dollar. In addition to this, news about next bailout package about also announced. It is expected to arrive in January 2019.
Let us know what do you think about this bailout package, leave a comment below. 

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