ISLAMABAD: Pakistan received a much-needed inflow of $1 billion from the United Arab Emirates on Wednesday, hours before the formal approval of the $3 billion nine-month Stand-By Arrangement by the executive board of the International Monetary Fund.

The UAE, our brotherly country and friend has deposited $1bn into the State Bank of Pakistan’s account,” Finance Minister Ishq Dar announced in a video message saying that the funds would boost the country’s declining foreign exchange reserves.

“The Federal Reserve Bank has confirmed that this significant amount has been credited to the account of the SBP,” Mr Dar further said.

The $1bn has been transferred to the SBP account, just one day after receiving a $2bn deposit from Saudi Arabia. This brings the total external financing from friendly countries to $3bn, which was a requirement set by the IMF as a condition for signing the agreement.

The SBP reserves were $4.462bn as of June 30.

Mr Dar said funds received from Saudi Arabia and the UAE this week had collectively “increased the country’s reserves by $3bn in two days. This would reflect in the weekly update of foreign exchange reserves due to be issued on July 14, he added.

In April, the UAE reaffirmed its commitment to the IMF by pledging bilateral financial support of $1bn to Pakistan. This commitment came as the IMF was set to release funds under a bailout programme, which expired on June 30 with $2.5bn still pending. Following negotiations between the IMF and Pakistan, a new stand-by arrangement was agreed upon.

Likewise, Riyadh also pledged funds in April, which were released on July 11. However, the money was not immediately deposited with the SBP as Saudi Arabia wanted to ensure that the now-expired IMF bailout package would be approved and implemented before making the deposit.

Prime Minister Shehbaz Sharif tweeted that he was grateful to UAE President Mohamed Bin Zayed for the deposit of $1bn with the SBP. As a time-tested friend and brotherly country, the UAE has always come forward to support Pakistan, he further said.

“We deeply acknowledge this kind gesture and consider it critical to our efforts to stabilize the economy”, the prime minister further said.

The approval of $3bn SBA has paved the way for the release of $1.1bn tranche.

Published in Dawn, July 13th, 2023