The Pakistani economic affairs ministry and the Saudi Fund for Development announced they had agreed to fund oil derivatives worth $1 billion for the South Asian nation.
Due to its declining foreign exchange reserves and rapidly declining national currency, Pakistan has been experiencing a difficult economic scenario.
International agencies reduced the nation's credit ratings as worries about a potential default on its financial commitments grew.
“Following directives from King Salman bin Abdulaziz Al Saud & [His Royal Highness] Mohammed bin Salman, SFD CEO Mr. Sultan Al-Marshad, signed an agreement with Pakistan’s
Secretary Ministry of Economic Affairs, Dr. Kazim Niaz, to finance oil derivatives worth USD 1 Billion to Pakistan,” the Saudi agency announced in a Twitter post.
Financial instruments known as oil derivatives use energy products, such as crude oil, as their underlying assets. To access their value, which serves as the foundation of the contract, they can be traded.
“The agreement aims to support the economy of Pakistan, enhance sector growth, navigate economic challenges, and build a sustainable economy,” the SFD added. “It comes as a continuation of the support provided previously in 2019 by Saudi to finance oil derivatives with a total of USD 4.4 billion.”Pakistani Prime Minister Shehbaz Sharif received the SFD delegation, headed by CEO Al-Marshad, in Islamabad on Thursday, where they reviewed the fund’s development projects and programs in Pakistan, and discussed ways to enhance development cooperation between the two sides.
The prime minister expressed his appreciation for the Kingdom's assistance for his nation's growth through the SFD.
Al-Marshad emphasised that the Saudi leadership is eager to promote the development cooperation between the two sides, which is the source of these development projects.
At a recent international meeting in Geneva, the Islamic Development Bank, which has its headquarters in Jeddah, also pledged more than $4 billion to fund the rehabilitation efforts in Pakistan following last year's floods.