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ISLAMABAD (Reuters) – Pakistan’s state bank coffers were boosted on Wednesday by a $1 billion deposit from the United Arab Emirates, officials said, ahead of the International Monetary Fund’s board meeting to approve new financing.
The deposit comes a day after Saudi Arabia transferred $2 billion to Islamabad, raising the country’s foreign reserves to $7.5 billion – more than double last week’s account balance.
The economy was exposed to a balance of payments crisis while it was trying to service the crippled external debt, while months of political chaos led to fear of foreign investment.
Inflation has soared, the rupee has fallen, and the country is struggling to afford imports, causing a sharp decline in industrial production.
Securing financial support from friendly countries was a key condition for the IMF to approve a new $3 billion standby agreement for Pakistan.
The package will be considered for approval by the International Monetary Fund’s executive board meeting in Washington this week.
“As a time-tested friend and sister country, the UAE has always come forward to support Pakistan,” Prime Minister Shahbaz Sharif wrote on Twitter late Wednesday.
“We greatly appreciate this kind gesture and consider it crucial to our efforts to stabilize the economy.”
Finance Minister Isaac Dar said the UAE deposit would be on the books by Friday.
Years of financial mismanagement have pushed Pakistan’s economy to the limit, exacerbated by the Covid pandemic, the global energy crisis and record floods that inundated a third of the country last year.
Pakistan’s headline inflation eased for the first time in seven months in June, a bright spot for the embattled government which must call elections later this year.
The deposit comes a day after Saudi Arabia transferred $2 billion to Islamabad, raising the country’s foreign reserves to $7.5 billion – more than double last week’s account balance.
The economy was exposed to a balance of payments crisis while it was trying to service the crippled external debt, while months of political chaos led to fear of foreign investment.
Inflation has soared, the rupee has fallen, and the country is struggling to afford imports, causing a sharp decline in industrial production.
Securing financial support from friendly countries was a key condition for the IMF to approve a new $3 billion standby agreement for Pakistan.
The package will be considered for approval by the International Monetary Fund’s executive board meeting in Washington this week.
“As a time-tested friend and sister country, the UAE has always come forward to support Pakistan,” Prime Minister Shahbaz Sharif wrote on Twitter late Wednesday.
“We greatly appreciate this kind gesture and consider it crucial to our efforts to stabilize the economy.”
Finance Minister Isaac Dar said the UAE deposit would be on the books by Friday.
Years of financial mismanagement have pushed Pakistan’s economy to the limit, exacerbated by the Covid pandemic, the global energy crisis and record floods that inundated a third of the country last year.
Pakistan’s headline inflation eased for the first time in seven months in June, a bright spot for the embattled government which must call elections later this year.
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