Saudi Arabia signed an agreement with Pakistan to finance a dam project at a value exceeding $240 million on Friday.
The Saudi Press Agency (SPA) reported that the Mohmand Hydropower Dam Project located on the Swat River north of Peshawar would be funded through a “soft development loan.”
The sum will be provided by the Saudi Fund for Development (SFD). The project aims to “enhance the supply of energy and water for agriculture and daily consumption, and protection from flood risks,” SPA added.
The dam would also produce clean energy, increase the production capacity of electricity to 800 megawatts, and store about 1.6 million cubic meters of water.
The agreement was signed in Islamabad by SFD CEO Sultan Abdulrahman al-Marshad and the Undersecretary of the Ministry of Economic Affairs, Dr. Kazim Niaz.
“This project is an extension of the support being provided by the Government of the Kingdom of Saudi Arabia through the Fund since its inception to finance vital and economic projects aimed at achieving growth in development support” for Pakistan, al-Marshad was quoted by SPA as saying.
The Saudi ambassador to Pakistan, Nawaf bin Saeed al-Malki, was also present.
The agreement comes after Pakistan’s junior Finance Minister Aisha Ghaus Pasha told reporters in Islamabad on Thursday that Saudi Arabia assured the IMF it will provide a $2 billion loan and help the South Asian nation avoid a default.
This meant Pakistan moved a step closer to an International Monetary Fund bailout.
The South Asian nation is going through one of its biggest economic crisis in history with default risks rising as per Moody’s Investors Service that downgraded the nation to its lowest-ever rating last month.
The nation raised interest rates to an all-time high this week after consumer prices quickened to a fresh record.
So far, there are over 40 development projects and programs by the SFD with a value of $1.4 billion, in addition to oil derivatives with a value exceeding $5.4 billion in the past four years, SPA reported.
The Saudi organization is currently financing around 76 projects and programs in African and Asian countries, according to the same report.