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Pakistan to pursue additional $3.2bn from Saudi Arabia

Federal Shariat Court declares interest-based banking as against Sharia

Pakistan has made the decision to seek an additional $3.2 billion package from Saudi Arabia to increase the total $7.4 billion facility from the existing $4.2 billion during the visit of Prime Minister Shehbaz Sharif, in order to prevent further depletion of foreign currency reserves.

Local media reported that the government would request the Kingdom of Saudi Arabia to increase the deposit amount from $3 billion to $5 billion. It will also request to double the Saudi Oil Facility from $1.2 billion to $2.4 billion, bringing the total package up to $7.4 billion during the visit of premier Shehbaz Sharif.

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Meanwhile, the Federal Shariat Court (FSC) on Thursday declared a verdict in a long-running case on Riba (interest), announcing that the interest-based banking system was against the Sharia. It directed the government to enable all loans under an interest-free system.

In its long-anticipated verdict, the court ruled that the government must amend relevant laws and issue directives declaring the country’s banking systems free of interest by December 2027.

The court noted that banks were getting more than the amount of the loan which was considered as usury. The FSC also announced that all provisions of the Interest Act 1839 were unlawful.

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The court had reserved its verdict in the case on April 12.

Following today’s development, Finance Minister Miftah Ismail said that the government welcomed the decision by the Federal Shariat Court. In a tweet, the minister said, “The government and SBP will carefully study this important decision and then seek guidance and clarification from the FSC about the process, steps and timeframe to implement this decision.”



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