The Saudi Fund for Development will study the possibility of raising the current $3 billion deposit to $5 billion in Pakistan’s central bank. To provide additional relief to Pakistan’s economy, which is reeling from deadly floods, Saudi Arabia’s Crown Prince Mohammed bin Salman has directed an investigation to increase the kingdom’s assistance and investments.
According to the official Saudi Press Agency, the Saudi Fund for Development will study the possibility of raising the current $3 billion deposit to $5 billion in Pakistan’s central bank. According to the same report, the plan to increase investments to $10 billion in Pakistan will also be evaluated.
The kingdom’s fund offers grants and low-interest loans to developing nations to strengthen existing alliances and forge new ones. The announcement comes a day after the Crown Prince met with General Syed Asim Munir, head of the Pakistani army, to discuss ways to improve bilateral relations and foster cooperation.
After a standoff with the International Monetary Fund over tax targets prevented loan installments from being disbursed, Pakistan’s economy was severely cash-strapped. Floods that submerged a third of the country and reduced its growth by half made the situation worse. To survive the crisis, Pakistan has relied on friendly nations. Over $10 billion in aid commitments were made to the country earlier this week.
The country’s foreign exchange reserves decreased to $5.6 billion, the lowest level in nearly nine years and just enough to pay for imports for less than one month. Downgrades were prompted by the deteriorating economic outlook, which compelled the government to announce austerity measures to lower energy costs and save money.