Cash-strapped Pakistan receives $8 billion in financial aid from Saudi Arabia: The Tribune India
Islamabad, May 1
Saudi Arabia has agreed to provide Pakistan with a “significant package” of around $8 billion to help the cash-strapped country bolster its dwindling foreign exchange reserves and revive its struggling economy, a report said on Sunday. media.
Pakistan faces growing economic challenges, with high inflation, dwindling foreign exchange reserves, a growing current account deficit and a depreciating currency.
Pakistan secured the deal during Prime Minister Shehbaz Sharif’s visit to Saudi Arabia. The financial package includes the doubling of the oil financing facility, additional funds in the form of deposits or Sukuks and the renewal of existing facilities by $4.2 billion, The News newspaper reported.
“However, the technical details are being worked out and it will take a few weeks for all the documents to be ready,” the report said, citing key official sources familiar with the development.
Prime Minister Sharif and his official entourage have left Saudi Arabia but Finance Minister Miftah Ismail is still in the Gulf country to finalize the terms of the financial package.
“I have just said goodbye to Prime Minister Shehbaz Sharif and other colleagues at Jeddah Airport, who are on their way to Islamabad after a brief stopover in Abu Dhabi to meet Crown Prince Muhammad Bin Zayed. I remain in South Africa to meet with Saudi officials and begin talks at the technical level,” Ismail said in a tweet.
Pakistan had offered to double the oil facility from $1.2 billion to $2.4 billion and Saudi Arabia agreed. It was also agreed that existing deposits of $3 billion would be rolled over for an extended period until June 2023, according to an official.
“Pakistan and Saudi Arabia have discussed an additional package of over $2 billion either through deposits or through Sukuk and it is likely that more money will be provided to Islamabad” , the report says, adding that the size of the total package will be determined when the extra money is finalized.
Saudi Arabia provided $3 billion in deposits to the State Bank of Pakistan in December 2021, while the Saudi Petroleum Facility was commissioned from March 2022, providing Pakistan with $100 million for get oil.
The oil-rich Gulf nation provided a $7.5 billion package to Pakistan during the last term of the PML-N government (2013-18). Under the PTI-led regime led by former Prime Minister Imran Khan, Saudi Arabia provided a $4.2 billion package, including $3 billion in deposits and a $1.2 billion oil facility of dollars for a year and tied it to the IMF program.
Saudi Arabia has provided an improved financial package to Pakistan as its economy is in dire straits and the country faces a balance of payments crisis. The country’s foreign exchange reserves have been depleted by $6 billion in the past six to seven weeks and plunged to $10.5 billion.
With the current account deficit increasing to $13.2 billion in the first nine months and pressing demands for repayment of external loans, Pakistan needs $9-12 billion in financial assistance until in June 2022 to avoid further depletion of foreign exchange reserves.