Syed Raza Hassan

KARACHI (Reuters) – Pakistan received a loan of $3 billion from Saudi Arabia on Saturday, according to the finance advisor to the prime minister. This was part of an economic assistance package.

South Asia’s country is facing growing economic problems, such as high inflation, falling forex reserves and an increasing current account deficit.

Pakistan’s total liquid foreign reserves stand at $22,498 billion, based on central bank data.

Shaukat Tarni, the finance advisor to Pakistan’s Prime Minister Imran Khan said, in a Twitter, “I wish to thank His Excellency Prince Mohammed Bin Salman (and Kingdom of Saudi Arabia) for their kind gesture.”

According to the agreement signed last month, the loan from Saudi Arabia is for one year and will carry a 4% rate.

Saad Hashemy (executive director, BMA Capital) stated: “This positive news… will help boost both the foreign currency reserves as well sentiments in forex market.”

It comes one week after Pakistan and the International Monetary Fund reached an agreement on measures that would revive a $6 billion funding scheme.

The IMF will complete the review that has been pending for some time. It would be able to make available approximately $1 billion in IMF special drawings rights. That brings total disbursements to $3 billion.

To counter rising inflation, Pakistan’s central banks has increased its benchmark interest rate 150 basis points by 8.75%

The November inflation rate was 11.5%, up from 9.2% one month prior.

Over 11% has been seen in the Pakistani rupee’s appreciation since January 1, when it closed at 176.77 inter-bank.