PremiumThe financial package includes doubling of the oil financing facility, additional money either through deposits or Sukuks, and rolling over of the existing $4.2 billion facilities, the report said
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Pakistan—which is grappling with economic challenges, high inflation, sliding forex reserves, and a widening current account deficit (CAD)—has secured a "sizeable package" of around $8 billion from Saudi Arabia during the visit of Prime Minister Shehbaz Sharif to revive its ailing economy, a media report said
Sunday.
The financial package includes doubling of the oil financing facility, additional money either through deposits or Sukuks, and rolling over of the existing $4.2 billion facilities, the report said
"The Kingdom of Saudi Arabia affirmed its continued support to Pakistan and its economy including the discussion of augmenting the three billion USD deposit with the central bank through term extension or otherwise, and exploring options to further enhance the financing of petroleum products and supporting the economic structural reforms for the benefit of Pakistan and its people. Pakistan greatly appreciates the continued strong support of the Kingdom of Saudi Arabia to Pakistan', Pakistan finance minister Miftah Ismail tweeted.
"However, technical details are being worked out and it will take a couple of weeks to get all documents ready," the report said.
The report further said though the Pakistani prime minister and his official entourage have left the Gulf nation, the finance minister Miftah Ismail is still in Saudi Arabia to finalise the modalities of the increased financial package.
"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 SA to meet Saudi officials and start technical-level talks," Pakistan's finance minister tweeted.
According to an official, Pakistan had proposed doubling the oil facility from $1.2 billion to $2.4 billion and Saudi Arabia agreed to it. It was also agreed that the existing deposits of $3 billion would be rolled over for an extended period of up to June 2023.
"Pakistan and Saudi Arabia discussed an additional package of over $2 billion either through deposits or Sukuk and it is likely that more money will be provided to Islamabad," the report said, adding that the size of the total package will be determined when the additional money is finalised.
Earlier in Dec 2021, Saudi Arabia provided $3 billion deposits to the State Bank of Pakistan. The Gulf country also provided $100 million to procure oil while the Saudi oil facility was operationalised in March 2022.
The Gulf nation had provided a $7.5 billion package to Pakistan during the last tenure of the PML-N government (2013-18).
Under the Imran Khan regime, the oil-rich nation had provided a package of $4.2 billion, including $3 billion deposits and a $1.2 billion oil facility for one year.
The oil-rich Gulf nation has provided an enhanced financial package to Pakistan when its economy is in dire straits and the country is facing a balance of payment crisis.
Pakistan’s foreign exchange reserves have depleted by $6 billion in the last six to seven weeks and nosedived to $10.5 billion. With the rising CAD at $13.2 billion in the first nine months and pressing external loan repayment requirements, Pakistan requires financial assistance of $9-12 billion till June 2022 to avert further depletion of foreign currency reserves.