Pakistan has faced growing economic challenges, with high inflation, dwindling foreign exchange reserves, rising current account deficit and depreciating currency.
Pakistan has faced growing economic challenges, with high inflation, dwindling foreign exchange reserves, rising current account deficit and depreciating currency.
Saudi Arabia has agreed to provide a “big package” of about $8 billion to Pakistan to help the cash-strapped country strengthen its dwindling foreign exchange reserves and revive its ailing economy. A media report said on Sunday.
Pakistan has faced increasing 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 Shahbaz Sharif’s visit to Saudi Arabia. The financial package includes a doubling of the oil financing facility, additional funding through deposits or succulents, and the rolling out of existing $4.2 billion facilities. 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 top official sources familiar with the development.
Prime Minister Sharif and his official team have left Saudi Arabia but Finance Minister Mifta Ismail is still in the Gulf to finalize the modalities of the financial package.
“Say goodbye to Prime Minister Shahbaz Sharif and other colleagues at Jeddah airport, who are on their way to Islamabad to meet Crown Prince Muhammad bin Zayed after a brief stop in Abu Dhabi. I am to meet Saudi officials and begin technical Live in SA- level talks,” Mr Ismail said in a tweet.
Pakistan had proposed to increase the oil facility from $1.2 billion to $2.4 billion and Saudi Arabia agreed. According to an official, it was also agreed that the existing deposits of $3 billion would be rolled over for an extended period till June 2023.
“Pakistan and Saudi Arabia discussed an additional package of more than $2 billion through deposits or sukuk and it is likely that more funds will be provided to Islamabad,” the report said. Money is final.
Saudi Arabia provided a $3 billion deposit to the State Bank of Pakistan in December 2021, while the Saudi oil facility became operational from March 2022, giving Pakistan $100 million to buy oil.
The oil-rich Gulf country had given a package of $ 7.5 billion to Pakistan during the previous term of the PML-N government (2013-18). Under the PTI-led regime headed by former prime minister Imran Khan, Saudi Arabia provided a $4.2 billion package, including a $3 billion deposit and a $1.2 billion oil facility for one year, and removed it from the IMF program. couple.
Saudi Arabia has provided an enhanced financial package to Pakistan at a time when its economy is in dire straits and the country is facing a payments crisis. In the last six to seven weeks, the country’s foreign exchange reserves have fallen by $ 6 billion and have come down to $10.5 billion.
With the current account deficit widening to $13.2 billion in the first nine months and pressure on external debt repayment requirements, Pakistan needs financial assistance of $9-12 billion by June 2022 to prevent further depletion of foreign exchange reserves. .