Pakistan needs IMF loan despite Saudi’s $ 6bn rescue package
Analysts say that the Saudi infusion will allow Islamabad to breathe a little easier as it seeks a critical loan from IMF. Pakistan is seeking an $ 8 billion to $ 11 billion IMF bailout package
Islamabad, Oct. 24: Pakistan has negotiated a $ 6 billion assistance package of loans and deferred payments from Saudi Arabia in hopes of resuscitating its flagging economy, struggling under the weight of a whopping $ 18 billion deficit.
Analysts say that the Saudi infusion will allow Islamabad to breathe a little easier as it seeks a critical loan from the International Monetary Fund.
The deal was signed Tuesday by Pakistan’s finance minister Asad Umar and his Saudi counterpart, Muhammad Abdullah Al- Jadaan, on the sidelines of an international investment forum underway in Riyadh.
It came as Pakistan’s new Prime Minister Imran Khan attended the highprofile conference, despite calls from Pakistani human rights activists to boycott the venue in protest of the killing of journalist Jamal Khashoggi in the Saudi Consulate in Istanbul — a slaying that has shocked the international community. The desperately needed Saudi financial infusion provides Pakistan with an immediate $ 3 billion to bolster its foreign exchange reserves, according to a foreign ministry statement. Pakistan is to return the $ 3 billion after one year, but the terms are apparently negotiable.
Pakistan is also to receive $ 3 billion in oil imports on a buy- now- paylater basis under the Saudi deal. Currently, Pakistan imports more than 1 million barrels of Saudi oil a day at an annual cost of $ 3 billion.
The assistance package will put Pakistan in a better bargaining position going into negotiations with the IMF, said Tariq Yousuf Khan, an economics professor in the southern port city of Karachi.
Pakistan is seeking an $ 8 billion to $ 11 billion IMF bailout package.
“Now Pakistan is in a better position to talk to IMF negotiators and perhaps negotiate more favorable conditions,” the professor said. An IMF delegation is expected in Pakistan next month.
Pakistan has long standing, deep ties with Saudi Arabia but often finds itself walking a tightrope between Riyadh and Tehran. It has also offered to act as a mediator to reduce hostilities between the Sunni and the Shia power. Like Saudi Arabia, Pakistan is a majority Sunni nation with a Shia minority.