Saudi Arabia deposits $3bln at Egyptian central bank; extends the term of a current $2.3bln

RIYADH: Saudi Arabia has deposited $3 billion in the Central Bank of Egypt, and also extended the term of current deposits, which amounted to $2.3 billion, Asharq news reported citing a source. 

The Kingdom also announced making deposits amounting to $3 billion to the State Bank of Pakistan in addition to providing $1.2 billion in trade finance to support Pakistan’s balance of payments.

These facilities together amounted to $9.5 billion, which represents 75 percent of the Kingdom’s Special Drawing Rights (SDR) created by the International Monetary Fund, Asharq reported.

The Saudi Central Bank’s SDR at the IMF recorded a strong jump by the end of August 2021 with the value of assets rising in one month by 163.51 percent reaching nearly SR82.32 billion.

By the end of August, IMF distributed special drawing rights for the fourth time in its history to its members. The value of SDR amounted to nearly $650 billion, equivalent to 456 billion units, which is the largest in history.

Saudi Arabia is the largest Arab country to obtain 9577.5 million SDRs, and its voting share is 2.1 percent. The UAE comes in second place with 2125.2 million SDRs, and its voting share is 0.49 percent, while Egypt comes in third place with 1952.5 SDRs and its voting share is 0.43 percent.

Special drawing rights are supplementary foreign exchange reserve assets defined and maintained by IMF. SDRs are units of account for the IMF, and not a currency per se. They represent a claim to currency held by the IMF member countries for which they may be exchanged.

This international reserve asset was created by the IMF in 1969 to supplement official reserves of its member countries when they met with a shortfall of preferred foreign exchange reserve assets, namely gold and US dollars.

The most recent allocation was in August this year to address the long-term global need for reserves and help countries cope with the impact of the coronavirus pandemic. This accounted for SDR456 billion, the largest ever allocation that was approved on Aug. 2 and came into effect on Aug. 23.

The value of the SDR is based on a basket of international currencies such as US dollar, Japanese yen, euro, the British pound sterling and the Chinese yuan. SDRs are allocated by the IMF to countries and cannot be held or used by private parties.