UAE gives $3 billion to Pakistan; will it lift the rupee?
Dubai - The new flow of funds from the UAE will ease pressure on Pakistan's currency.
By Waheed Abbas
Published: Wed 23 Jan 2019, 4:13 PM
Last updated: Wed 23 Jan 2019, 11:27 PM
Abu Dhabi Fund for Development (ADFD), the leading national entity for international development aid, has formalised $3 billion (Dh11 billion) deposit into the State Bank of Pakistan to support Pakistan's economic growth and achieve the long-term objectives of its monetary policy.
Announced in December 2018, the decision to formalise the deposit was made under the directives of the UAE President His Highness Sheikh Khalifa bin Zayed Al Nahyan and His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
Minister for Planning and Development Makhdoom Khusro Bakhtiar recently said Islamabad will receive $1 billion grant from China, hence increasing Pakistan's foreign exchange reserves to $11 billion. Currently, forex reserves stand at just below $7 billion. In the current financial year, Islamabad has to pay $9 billion loan which includes $7.27 billion principal amount and $1.787 billion interest.
The new funds flow from the UAE will ease pressure on Pakistan's currency which plunged over 26 per cent in 2018. Analysts said the new fund from the UAE will arrest rupee's slide and help it stabilise at current levels in the near future. The rupee was trading at 38 against dirham on Tuesday.
Mohammed Saif Al Suwaidi, director-general of ADFD, and Tariq Bajwa, Governor of the State Bank of Pakistan, signed the agreement at the ADFD headquarters in Abu Dhabi. Moazzam Ahmad Khan, Ambassador of Pakistan to the UAE, Khalifa Al Qubaisi, deputy director-general of ADFD, and other senior representatives of the two parties attended the signing ceremony.
"The directive to deposit US$3 billion with the State Bank of Pakistan aligns with the UAE leadership's keenness to bolster Pakistan's economy, help its government achieve financial stability and overcome economic challenges, and drive comprehensive development in the country," said Mohammed Saif Al Suwaidi.
"ADFD and the Government of Pakistan have enjoyed strong and long-standing ties dating back to 1981. The Fund's efforts have significantly contributed to improving socio-economic conditions in the country, boosting strategic growth and achieving the development priorities of the Pakistani government," he added.
Tariq Bajwa, praised the UAE leadership for their continued support to the people of Pakistan. He also noted the support from ADFD over the years has stimulated economic growth and contributed to sustainable development.
To-date, ADFD has provided Dh1.5 billion to fund sustainable development projects in Pakistan spanning diverse sectors, including transport, water and agriculture, healthcare, and education.