Shehbaz May Seek $7.4 Billion Saudi Aid Package

By Shahbaz Rana

Islamabad: Pakistan may seek a $7.4 billion financial assistance package from Saudi Arabia in the shape of cash deposits and oil on deferred payments, including rollover of the existing $4.2 billion facilities that are expiring by the end of this year.

The request will be made during the three-day visit of Prime Minister Shehbaz Sharif that began on Thursday, according to the Ministry of Finance officials. Finance Minister Dr Miftah Ismail is also part of the official entourage.

Senior finance ministry officials said that the government would seek $2 billion additional cash deposit in addition to the rollover of the existing $3 billion facility, which would mature by the end of this year. They said this time the country was seeking the loan for a longer than one year period, in addition to relaxation in terms of the previous agreement.

In October last year, the Kingdom of Saudi Arabia had announced giving $3 billion in cash deposit for one year and oil on deferred payment equal to $1.2 billion annually. However, the oil facility became operational only in March this year when the country lifted $100 million equivalent oil.

The request will also be made to double the oil on deferred payments limit to $2.4 billion, according to the officials. The net additional financial assistance is $3.2 billion in the shape of cash deposits and oil on deferred payments.

The PTI government had obtained $3 billion cash at 4% interest rate and the oil on deferred payments at 3.8% rate for one year, according to the terms agreed between both countries. Unlike in the past, there was no option for the rollover of the Saudi loan and the country is required to return it at once after one year.

However, the sources said that the government also wanted to renegotiate the terms of the November 2021 agreement.

The PTI government had to accept tough loan conditions due to the weakening external sector situation and its inability to enhance the foreign exchange reserves to a level that was sufficient to comfortably finance the imports. Former prime minister Imran Khan’s government took gross $57 billion loans to remain afloat.

The new government, too, did not have an option but to rush to the IMF and also seek help from friendly countries to stabilize the economy and arrest the downward slide in the value of the rupee.

In 2014, Saudi Arabia had given a $1.5 billion grant to the government of former Prime Minister Nawaz Sharif… – The Express Tribune

Courtesy The Express Tribune

April 29 , 2022

Shehbaz May Seek $7.4 Billion Saudi Aid Package

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