pakistan requests $1 billion oil facility from saudi arabia
As Pakistan gears up for discussions with the International Monetary Fund (IMF), the government has reached out to Saudi Arabia, asking for a significant financial favor. They’ve made a formal request for a $1 billion oil facility on a deferred payment plan, starting from January 2024. However, Saudi Arabia has not confirmed this request yet, and the details are yet to be finalized over the next few months, including the cost and other conditions.
This financial assistance is part of Pakistan’s plan to work with the IMF. Pakistan had earlier agreed to a $3 billion Standby Arrangement (SBA) to address its financial needs. The current arrangement is set to end in December this year.
Pakistan has already received $300 million in the last three months (July to September) of the current fiscal year. Under the existing Saudi Oil Facility (SOF), Saudi Arabia disbursed $700 million between March and September 2023, and an additional $300 million was expected to be disbursed by the end of December 2023.
On a related note, the Islamic Development Bank (IsDB) had pledged $3.3 billion, with the promise of $1 billion this fiscal year. However, they have indicated that they might reduce this amount to around $250-500 million due to challenges in obtaining loans from international institutions at high interest rates.
In preparation for the upcoming talks with the IMF, Pakistan’s Ministry of Finance is working diligently. The talks are expected to take place in the first 10 days of November, although the exact schedule is yet to be confirmed.
To align with IMF agreements, Pakistan’s finance ministry has been taking steps to limit the budget deficit. This includes urging provinces to reduce spending
The government is worried because they might have to spend more money to pay off their debts this year, around Rs8.5 trillion instead of the planned Rs7.3 trillion. All because of higher interest rates set by the central bank. To fix this money problem.
The government is trying to get help from Saudi Arabia and the IMF to make their financial situation stable.